The rupee snapped its five day losing streak and strengthened to close higher at 56.44 against the dollar on the back of government’s announcement to hike the foreign institutional investment limit by $5 billion in government security.
The Indian unit also got a shot in the arm after Reserve Bank of India put more restrictions on gold imports. This is seen as an attempt by the central bank to reduce the current account deficit of the country.
“There was less demand for the dollar today and also the circular by RBI on gold imports boosted the sentiment in currency markets toward the day end,” a treasury manager with a public sector bank said.
The Indian unit opened stronger at 56.59 against its previous close of 56.77, on the back of good showing by domestic equity markets in morning trade.
The rupee depreciated b 4.8 per cent in May.
The US dollar index was trading down at 82.70 against a basket of world’s major currencies. The index touched a high of 84.49 earlier in the year. This also helped the Indian unit.
Call rates lower; G-Sec up
The interbank call money rates closed slightly lower at 7.25 per cent from previous close of 7.30 per cent.
The 8.15 per cent government security, which matures in 2022, closed sharply higher at Rs 104.95 from previous close of Rs 104.49. Yields softened to 7.39 per cent from previous close of 7.46 per cent.