The rupee posted strong gains on Tuesday to end at 47.80 against the dollar, with the dollar losing ground against most major global currencies. However, a downswing in stocks capped any major rise. Dealers also spoke of importers buying dollars in the market, ahead of the month end. It had closed at 48.11 on Monday.
Dealers say the budget will determine any further direction the local unit takes. Before the budget, the two data keenly-watched will be May trade figures on July 1 in New Delhi and Economic Survey on July 2. The dollar fell for a fourth day against the euro as stocks rose on investor speculation that he global recession is heading to a close, increasing demand for emerging market assets.
Economists say that traders are being foolhardy, after data showed that UK economy shrank more than previously estimated in the first quarter. GDP fell 2.4% from the final three months of 2008 compared with the prior measurement of a 1.9% drop, as per government data. All eyes are now on US consumer confidence numbers that will be out soon, and could further confidence to traders to buy higher-yielding assets.
“Investors are moving out from the cover of secure currencies like dollar and exploring other pairs triggering the movement from secured currencies to high yield assets,” said Pramit Brahmbhatt, CEO, Alpari India, a forex trading brokerage.
“We can see an upside of 48.5 than 49 with 50 in extension while our preference for short position is 47.5 with 47 in extension for the dollar,” he added.
Government bonds ended flat amidst speculation that the Centre may not overshoot its borrowings targets for this year. The central bank said on Tuesday it will buy back debt securities next week. There is no auction of debt securities for this week, as per the RBI calendar of auctions. The government has said that it will sell Rs 34,000 crore of bonds in July, compared to the Rs 60,000 crore it sold in June.
The yield on the most traded debt ended at 6.49% against 6.47% at close on Monday. The ten-year bond only saw trades worth Rs 330 crore. The central bank will auction Rs 3,000 crore of treasury bills on Wednesday.
Source : The Economic Times