Indian Rupee Vs Dollar: The Indian Rupee opened strongly at 93 against the US Dollar on Monday (April 6), while it closed at 93.10 on Thursday (April 2). This continued the trend of last week’s gains, which continues to be supported by the measures recently implemented by the Central Bank.
Last week, this currency had gained 1.8%, which was its biggest weekly gain in four years. This happened when the Reserve Bank of India fixed ‘position limits’ (transaction limits) for banks and companies. The move was aimed at curbing arbitrage opportunities between the onshore and ‘non-deliverable forward’ (NDF) markets. This was a process through which banks were liquidating their positions. Were selling dollars in the domestic market.
Banks have been instructed to correct their ‘exposure’ (transaction position) as per the new limits by April 10. Market experts said that many banks have already reduced their positions. Some are still in the process of following this instruction.
“This will provide continued support to the rupee throughout the week,” said a currency trader at a bank. The Central Bank has also tightened the rules on betting related activities carried out by companies. Banks have been stopped from giving NDF contracts to customers. In this way it has indicated its intention to stabilize the currency.
Additionally, foreign investors continued to pull their money out of Indian stocks, citing concerns over the economic impact of rising energy costs. The data showed that after a withdrawal of more than $12.5 billion in March, there was another outflow of almost $1 billion on Thursday (April 2).
Indian bond yield increased by 2 basis points
On April 6, Indian bond yields rose by 2 basis points (bps), partially compensating for the losses incurred in the previous session. The stir came as state governments were bracing for lower-than-expected fund raising, while traders were keeping a close eye on Brent crude prices, which were trading above $100 a barrel.
The benchmark 10-year bond yield was trading at 7.1130 percent, while it had closed at 7.1329 percent in the previous session. Currency and fixed-income markets remained closed on Friday as it was a public holiday. Bond prices and yields move in opposite directions.
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