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Rupee closes marginally weaker at 58.51 per dollar

LiveMint logoLiveMint 23-05-2014 Ashwin Ramarathinam

Mumbai: The rupee closed marginally weaker against the dollar on Friday on demand for the US currency from state-owned banks, likely on behalf of the Reserve Bank of India (RBI).

The local currency closed at 58.5075 to the dollar, down 0.08% from its previous close, after touching a high of 58.36 per dollar on Friday.

“There are definitely dollar inflows in the market but right now those are being sucked out by state-owned banks, likely on behalf of RBI, and that is why the rupee has hardly moved from yesterday’s (Thursday’s) closing level,” said a dealer with a French bank. The Indian currency which is trading near an 11-month high had closed at 58.47 to the dollar on Thursday.

Dollar inflows from foreign institutional investors (FIIs) have taken the local stock market to record highs.

The 30-share BSE Sensex gained 1.31% to close at 24,693.35 points, while the National Stock Exchange’s broader 50-share Nifty index added 1.25% to close at 7367.10 points.

Optimism that the new government, which is not dependent on the support of regional allies, will cut spending and narrow the fiscal deficit has also led to buying in the local bond market.

The yield on the 10-year government bond stood at 8.634%, its lowest since January and down from its previous close of 8.71% as traders bought sovereign debt expecting the economy to improve. ​

Since January, the rupee has risen 5.63% and it is currently the highest gainer in Asia, surpassing the Indonesian rupiah.

The dollar index, which measures the US currency’s strength against major global currencies, was trading at 80.38, against its previous close of 80.254.

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