Rupee hits 3-week high against dollar - Livemint

The yield on India’s 10-year benchmark bond ended at 8.66%, compared with its Tuesday’s close of 8.737%. Photo: AFP

Mumbai: The Indian rupee strengthened for the second day against the dollar on the hopes of strong economic measures in the forthcoming Union budget. The Narendra Modi -led National Democratic Alliance government will present its first budget on 10 July.

Finance minister Arun Jaitley said on Tuesday that the government would take bold decisions and pursue the path of fiscal prudence to revive the economy.

Global investors are looking for measures from the new government to improve the country’s finances and support economic growth.

The home currency opened at 60.07 a dollar from its Tuesday’s close of 60.08. The unit touched a high of 59.63, a level last seen on 13 June.

The rupee closed at 59.69, up 0.64%, highest since 12 June. India’s equity benchmark S&P BSE Sensex rose 1.27% to close at an all-time high of 25,841.21 points.

According to traders, the Reserve Bank of India (RBI) intervened in the foreign exchange market by purchasing dollars via state-run banks at 59.70 level to prevent further appreciation of the local unit.

Typically, the central bank intervenes in the currency market to check excess volatility of the currency.

The yield on India’s 10-year benchmark bond ended at 8.66%, compared with its Tuesday’s close of 8.737%. Bond yields and prices move in opposite directions.

The dollar index, which measures the U.S. currency’s strength against major currencies, was trading at 79.855, up 0.05% from its the previous close of 79.815.

Since the beginning of this year, the rupee has gained 3.53% against the dollar, while foreign institutional investors have bought $9.92 billion from local equity markets.

The HSBC India Manufacturing Purchasing Managers’ Index (PMI), a measure of factory production, rose marginally from 51.4 in May to 51.5 in June as operating conditions improved for the eighth month in succession.

Meanwhile, rating agency Fitch said India’s economic growth will accelerate to 5.5% this fiscal and 6.5% in 2015-16 due to the clear mandate received by the pro-reform Modi government.

Reuters contributed to this story.