The rupee closed steady at 54.26 against the dollar on the first trading day of the new financial year on renewed hopes of economic recovery. The Indian unit had closed at 54.29 on Thursday. The currency markets remained closed on Friday and Monday.
The Finance Minister said in Tokyo on Monday that the Government will take steps to bring down the current account deficit.
A wide current account gap, such as the one recently witnessed, can lead the rupee into a downward spiral.
“Since past few sessions, we have been witnessing a very thin range in rupee as there are mixed signals coming from local and global fronts. Going ahead, we expect this week to be volatile, as major central banks will be announcing their respective monetary policies,” said Abhishek Goenka, Founder and CEO, India Forex Advisors.
Intraday, the rupee moved between a high and low of 54.24 and 54.36, respectively.
Call drops, bonds jump
The inter-bank call money rates closed sharply lower at 7 per cent amid high liquidity. Last week, banks had borrowed excessively to meet the year-end requirements which had pushed the call money rates to 17 per cent. The 8.15 per cent government security, which matures in 2022, closed sharply higher at Rs 101.99 (yield: 7.99 per cent) from previous close of Rs 101.26 (yield: 7.95 per cent).