A day after the RBI policy, the Indian rupee closed stronger at 59.89 against the American dollar on continued dollar inflow into the equity markets.
The currency market had remained closed on Monday and Tuesday.
The domestic unit opened stronger at 59.80 per dollar as against Friday’s close of 59.95 as the RBI kept its key policy rates unchanged as expected by market players.
Thereafter, positive sentiments and inflows continued to help the unit as it continued to appreciate to 59.59 as against the greenback in the afternoon trades amid less liquidity and as also importers stayed away from the market.
“However, it declined to 59.93 towards the end of the day as foreign banks bought dollars from the market,” said a dealer with a nationalised bank.
Importers are likely to stay away from the market till the national elections are over, the dealer said. This will allow the Indian currency more room to appreciate.
Also, higher inflows into the equity markets supported the rupee. BSE-benchmark Sensex ended at 22,551 points, higher by 105 points (0.47 per cent) over the previous close.
Call Rates lower; Bonds end higher
The overnight call money rate, interest rate at which banks borrow money from each other to overcome short-term liquidity mismatches, settled weaker at 8.15 per cent from Friday’s month-end closing of 11 per cent.
The yield on 10-year benchmark 8.83 per cent government bond, maturing in 2023, ended higher at 8.96 per cent from the previous close of 8.80 per cent on Friday.