Rupee strong at 61.66 against the dollar

MUMBAI, : The rupee was trading strong at 61.66 against the dollar at 11.18 a.m. local time.

The domestic unit opened strong by 9 paise at 61.63 per dollar against the previous close of 61.72 at the Interbank Foreign Exchange market today due to selling of the US currency by exporters and banks amid sustained capital inflows.

It hovered in the range of 61.63 and 61.79 in the morning trade.

The domestic unit depreciated by 17 paise to end at nearly one-month low of 61.72 against the greenback on Friday on sustained dollar demand even as domestic equities surged to new highs.

Traders said besides selling of the American currency by exporters and banks, continued foreign fund inflows helped the local currency to strengthen, but the dollar’s gains against other currencies overseas and a lower opening in the domestic equity market capped the rupee’s rise.

The Wholesale Price Index (WPI)-based inflation for October was at 1.77 per cent, the slowest pace since September 2009.

A decline in both consumer and wholesale price index inflation has increased market players’ expectations that the Reserve Bank of India (RBI) will cut rates at its next meeting due on December 2. Though many experts rule out the possibility of a rate cut, a rate cut is likely to help more inflows into the market.

The inter-bank call money rate, the rate at which banks borrow short-term funds from one another, opened higher at 8.15 per cent from the previous close of 7.75 per cent on Friday.

Yield on the 10-year benchmark 8.40 per cent government security, maturing in 2024, opened flat at 8.21 per cent, while the prices of the bond remained flat at Rs. 101.20.