Tag: fomc

NEW DELHI: The rupee strengthened marginally versus the US dollar on Wednesday because of a drop in global crude oil prices and on the back of dollar sales by foreign banks for overseas investments in initial public offerings of Indian companies, dealers said.

The domestic currency on Wednesday opened at 74.60 against the US dollar as against 74.6775 at the previous close. The local unit, which was last at 74.5550 versus the greenback, moved in the range of 74.5375-74.6425 so far in the day.

Crude oil prices declined, providing some relief for traders on the twin fronts of inflation and the trade deficit. India is the world’s third-largest importer and consumer of crude oil.

Oil futures for December delivery on the New York Mercantile Exchange declined 0.2 per cent to close at $83.91 per barrel on Tuesday.

The rupee had also gained sharply on Tuesday on account of flows for overseas investment into local companies, with the domestic currency adding 0.3 per cent versus the greenback.

“There were flows for Policybazaar IPO etc. And now we have Paytm IPO lined up as well next week,” a dealer with a private bank said on condition of anonymity.

“Oil seems to have stabilised a bit after the surge of this month. But having said that, we don’t expect a major degree of appreciation before the Fed’s statement. Whatever they say on tapering is going to set the tone for markets,” he said.

The US Federal Open Market Committee is scheduled to release its monetary policy statement late Wednesday.

Details of a potential rollback in quantitative easing in the world’s largest economy may play a major role in overseas investors’ appetite for emerging market currencies such as the rupee.

Government bonds were steady, with the yield on the 10-year benchmark 6.10 per cent 2031 paper unchanged at 6.36 per cent. Bond prices and yields move inversely.

Bond traders kept to the sidelines in a heavily truncated week. The market will be shut on Thursday and Friday on account of Diwali and Diwali Balipratipada.