MUMBAI: The rupee started the week on a strong note, ending 18 paise higher than Friday’s closing to end at 50.48 against the dollar due to stock
gains and greenback’s weakness overseas.
Bonds ended lower, with dealers still nervous about the impending announcement of the government borrowing calendar and a Reserve Bank of India (RBI) official announcing that the government would not privately place debt with the central bank.
The dollar fell broadly on Monday, as news of a US plan to remove toxic assets from banks’ balance sheets encouraged investors towards more riskier assets. ICICI Bank chief forex dealer L Subramanian said the US currency might be past its highs for the time being. This could mean despite concerns about capital flows and widening deficit, the rupee should strengthen in the short term. However, an intermediate correction cannot be ruled out, he warned.
The BSE Sensex rose 5.1%, its biggest single-day gain since early December, after the rescue package boosted investor confidence across Asia.
The rupee has gained 3.4% since touching 52.2 earlier this month. Bonds fell as RBI deputy governor said the central bank would not go for private placement of bonds, but it would buy bonds from the market as and when necessary.
Source : The Economic Times