Mumbai: The Indian rupee on Friday erased all the morning gains and was trading little changed against US dollar.
At 2pm, the home currency was trading at 64.99 a dollar, down 0.03% from its Friday’s close of 64.98. The rupee opened at 64.86 a dollar and touched a high and a low of 64.85 and 65.03, respectively.
Benchmark Sensex index rose 0.59%, or 196.91 points, to 32,823.88. So far this year, it has declined 1%.
Bond yield pared all the losses and was trading higher. Earlier, it opened lower after the Reserve Bank of India (RBI) on Friday announced an increase in foreign portfolio investment limit to buy sovereign and corporate bonds.
The 10-year bond yield was at 7.218% compared to its previous close of 7.127%. Bond yields and prices move in opposite directions.
“While the hike in the FPIs’ investment limit is somewhat smaller than market expectations, it would temporarily dampen bond yields further in the immediate term. Subsequently, the appetite of the FPIs for investing in Indian debt over the course of the year remains to be seen, given the expectation of continued monetary tightening by some global central banks,” said Aditi Nayar, principal economist, Icra Ltd.
Traders are cautious as the Federal Open Market Committee releases minutes of its March 20-21 meeting, at which central bankers raised their target rate a quarter-point for overnight bank lending.
So far this year, the rupee fell 1.76%, while foreign investors have bought $2.18 billion and $495.80 million in equity and debt markets, respectively.
Asian currencies were trading higher. South Korean won was up 0.33%, China Offshore 0.26%, Malaysian ringgit 0.18%, Singapore dollar 0.18%, Taiwan dollar 0.17%, Philippines peso 0.11%, Indonesian rupiah 0.1%, Thai Baht 0.07%, China renminbi 0.06%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 90.161, up 0.06% from its previous close of 90.108.