The rupee on Monday ended stronger at 62.32 against the dollar on the back of a turnaround in the manufacturing, indicating a recovery in the economy. It had closed at 62.45/$ on Friday.
HSBC’s manufacturing Purchase Managers Index (PMI) for India rose to 51.3 in November from 49.6 in October. This is the highest PMI level since March.
The latest PMI data along with Friday’s gross domestic product data, which showed a 4.8 per cent growth in GDP in the September quarter against 4.4 per cent in the first quarter, is likely to support the rupee.
This positive trend in PMI triggered more inflows into the equity market with BSE-benchmark Sensex (30-stock index) ending higher by 106 points (0.51 per cent) at a near one-month high of 20,898 points.
The Indian currency opened stronger at 62.33 to the dollar on increased dollar selling by banks and exporters and capital inflows into the domestic equity market. During the day, it touched a high of 61.97, after which it declined to 62.34 per dollar.
Since January, the rupee has fallen by about 13 per cent.
“We are seeing sustainable flows and the RBI today said it will make sure that the dollar requirement of oil marketing companies can be met through swap window if the demand for dollars increases,” said Ashish Parthasarthy, Head of Treasury, HDFC Bank. “The rupee should see some stability from here on. However, the flows into the equity market and the state election results will decide the movement going forward,” he added.
Call rate dips, bond yields flat
On the back of easy liquidity, the interbank call money rates, the rates at which banks borrow from each other to meet their short term requirements, closed lower at 6.75 per cent from Friday’s close of 7.50 per cent.
The 7.16 per cent benchmark government security, which matures in 2023, closed almost flat at Rs 88.16 from its previous close of Rs 88.17. The yields remained unchanged at 9.04 per cent.