FM pep talk ends rupee's six-day fall
The rupee on Friday soared 135 paise to end at 63.20 against dollar as the RBI heavi;y intervened in the forex market on the back of soothing statements from finance minister P Chidambaram. Strong reboundmumbai Updated: Aug 24, 2013 02:56 IST
The rupee on Friday soared 135 paise to end at 63.20 against dollar as the RBI heavily intervened in the forex market on the back of soothing statements from finance minister P Chidambaram, while shares jumped to a one-week high.
The currency and stock markets got a booster dose after Chidambaram 's comments that there are no plans to control capital outflows. RBI Governor D Subbarao had also said the country has enough reserves to meet the current situation.
Today's gain in rupee is the second-biggest in a decade.
With the rupee hitting an all-time low of 65.56 on Thursday, nationalised banks were seen heavily selling dollars today probably on the behalf of the central bank and this sharply lifted the battered currency, said Agam Gupta, MD and head of fixed income trading at Standard Chartered Bank.
The rupee, which had till on Thursday slid 17 % since December 31, has been weighed down by a CAD that has widened on the back of heavy oil and gold imports. Besides, fears of capital outflows linked to US Federal Reserve winding down its expansive economic stimulus has hit the rupee hard.
The rupee today jumped 135 paise to end at 63.20 against the US dollar. In absolute terms, this is the biggest rise in a decade after a 152 paise flare up on May 18, 2009.
Experts forecast the rupee will strengthen further to 60-61 levels by March as the current account deficit narrows and capital inflows are boosted by recent steps.
A strengthening rupee cuts the risk of price rises as the cost of importing oil and gas is lowered.
The buoyancy in currency markets spread to the stock markets with the benchmark S&P BSE Sensex soaring by 206 points to end at a one-week high of 18,519.44 -- led by robust buying in frontline shares of capital goods, refinery, banking and auto sectors.
However, gold prices fell by Rs 200-330 in major metros except Chennai. In bond markets, the 7.16 % government security maturing in 2023 fell to Rs 92.70 from Rs 92.88 yesterday, while its yield inched up to 8.26 % from 8.23 %.