Rupee gains 24 paise to 85.77 on weak dollar index

Synopsis

The currency strengthened to 85.59/$1 levels during the day, before losing some ground due to importer hedging demand, while likely intervention by theReaerve Bank of India (RBI) contained excess gains. The rupee had closed at 86.04 the previous day.

Mumbai: The Indian rupee strengthened 24 paise, or nearly three-tenths of a percentage point, to close at 85.77 per dollar on Tuesday on the back of a weak dollar index and portfolio inflows into domestic stocks and bonds, traders said.

The currency strengthened to 85.59/$1 levels during the day, before losing some ground due to importer hedging demand, while likely intervention by theReaerve Bank of India (RBI) contained excess gains. The rupee had closed at 86.04 the previous day.

The dollar index was trading around 99.7, from 102 levels last week.

"Rather than being treated as a safe haven, the dollar has traded more like an emerging market currency over the past week," a trader with a private sector bank said while commenting on the US dollar's safe haven status.

"The Indian rupee strengthened as inflows dominated outflows. RBI was likely present today and is expected to be present and absorb dollars to ensure that rupee remains competitive for exporters," said Anil Bhansali, head of treasury at Finrex Treasury Advisors.

RBI likely absorbed dollars around 85.59 levels, traders said. They are expecting the range for the rupee to be between 85.50/$1 and 86.25/$1 this week, which has been cut short due to market holidays.

The 10-year benchmark bond yield eased three basis points to close at 6.41%, near its January 2022 lows, after the Reserve Bank of India announced yet another liquidity injection on Friday. Yields are expected to be in the range of 6.40% to 6.45%. One basis point is 0.01 percentage point.

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