Paring initial losses, the rupee ended stronger at 54.84 against the dollar due to positive domestic markets amid on hopes of easing liquidity in the in the banking sector with advance tax outflows and an increase in the government's cash balance with the Reserve Bank of India.
On Monday, the RBI had announced that it would conduct open market operations (OMOs) by purchasing government securities for an aggregate amount of Rs 8,000 crore on December 28.
Falling back to 55-levels, the Indian unit had opened weaker at 55.07 from Monday's close of 54.96 per dollar on the back of month-end dollar demand from importers and uncertainty over the US’s impending fiscal crisis concerns. The foreign exchange markets had remained closed on Tuesday due to Christmas festival.
“The rupee will remain range-bound due to concerns of fiscal cliff and dollar demand from importers,” said a dealer with a public sector bank.
However, month-end demand for dollars will continue to put pressure on the rupee.
Call Rates and G-Secs
The overnight call money rates ended higher at 8.15 per cent from Monday’s close of 8.1 per cent.
The 10-year benchmark 8.15 per cent government security, which matures in 2022, closed higher at Rs 100.24 (yield: 8.11 per cent) from a close of Rs 100.13 (yield, 8.13 per cent) on Monday.