The rupee gained 6 paise to 63.25 per dollar in the opening trade against the previous close of 63.31 after the RBI Governor calmed the worried markets on Wednesday by stating that it would not rush to roll back dollar swap window for oil companies.
At 9.36 a.m., the domestic unit further strengthened to 63 per dollar.
On Wednesday, the domestic unit fell to a more than a two-month low of 63.88 against the American dollar in its opening trade citing heavy dollar demand from oil companies and banks.
RBI Governor, Raghuram Rajan, who called a sudden press conference on Wednesday, informed that the central bank has now routed back majority of the dollar demand from oil companies to the market.
After rupee sharply depreciated in July and August, RBI decided to supply dollar to oil companies to meet their dollar requirements. This helped bring appreciation in the domestic unit.
However, the currency market had started panicking after a Finance Ministry official confirmed last week that about 30-40 per cent of oil companies were buying dollar in the market. Since then, the rupee has declined to over two-month low.
Rajan’s statement that the central bank will not rush the process of withdrawing the dollar swap window and that there were various options for the oil companies to repay dollar to the central bank boosted the rupee sentiment. Further, amid FII heavy outflows, the RBI chief said India can still break even on capital flows, which in turn boosted the rupee sentiment.
In addition, in response to the much-talked about reports of US beginning to withdraw its fiscal stimulus earlier than expected, Rajan said India is better prepared to face the tapering now.
Call rates, G-secs
The overnight call money rate, the rate at which banks borrow short-term funds from each other, opened higher at 8.80 per cent from the previous close of 8.60 per cent.
The Rajan effect also helped the bond markets. Yields on the 10-year benchmark 7.16 per cent 2023 government remained flat from the previous close of 8.91 per cent. Bond prices opened a tad stronger at Rs 88.9 from Rs 88.88.
At 9.36 a.m., the domestic unit further strengthened to 63 per dollar.
On Wednesday, the domestic unit fell to a more than a two-month low of 63.88 against the American dollar in its opening trade citing heavy dollar demand from oil companies and banks.
RBI Governor, Raghuram Rajan, who called a sudden press conference on Wednesday, informed that the central bank has now routed back majority of the dollar demand from oil companies to the market.
After rupee sharply depreciated in July and August, RBI decided to supply dollar to oil companies to meet their dollar requirements. This helped bring appreciation in the domestic unit.
However, the currency market had started panicking after a Finance Ministry official confirmed last week that about 30-40 per cent of oil companies were buying dollar in the market. Since then, the rupee has declined to over two-month low.
Rajan’s statement that the central bank will not rush the process of withdrawing the dollar swap window and that there were various options for the oil companies to repay dollar to the central bank boosted the rupee sentiment. Further, amid FII heavy outflows, the RBI chief said India can still break even on capital flows, which in turn boosted the rupee sentiment.
In addition, in response to the much-talked about reports of US beginning to withdraw its fiscal stimulus earlier than expected, Rajan said India is better prepared to face the tapering now.
Call rates, G-secs
The overnight call money rate, the rate at which banks borrow short-term funds from each other, opened higher at 8.80 per cent from the previous close of 8.60 per cent.
The Rajan effect also helped the bond markets. Yields on the 10-year benchmark 7.16 per cent 2023 government remained flat from the previous close of 8.91 per cent. Bond prices opened a tad stronger at Rs 88.9 from Rs 88.88.
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