The rupee breached the 53-level to close 69 paise stronger, at a two-and-a-half month high of 53.70 against the dollar. The rupee strengthened on higher capital inflows even as the bellwether BSE Sensex closed above the 20,000 mark for the first time in two years. On Thursday, the Indian unit had closed at a two-week high of 54.39 per dollar. The rupee continued its strong showing on Friday, opening firm at 54.09 against the dollar, on the back of the Government's announcement on Thursday to deregulate diesel prices.
Fuel subsidies are a drain on India’s public finances and diesel price deregulation will help the Government bring the deficit within the target of 5.3 per cent of the gross domestic product for the financial year ending March 2013.
The rupee moved in the 53.70-54.16 range during the day. Sustained selling of the American currency by banks and exporters amid persistent capital inflows from foreign funds helped the Indian unit strengthen. Further, dollar’s weakness in the overseas market also boosted the rupee.
However, demand for dollars from oil importers may limit the rupee’s gains.
Call, bond rates down
The inter-bank call money rates closed lower at 7.65 per cent from its Thursday’s close of 8.15 per cent. It had opened at 8.10 per cent.
The 8.15 per cent government security, which matures in 2022, ended lower at Rs 101.87 (yield: 7.86 per cent) from the previous close of Rs 102.04 (yield: 7.84 per cent).