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Rupee gains against dollar as govt hikes import duties

549083-rupee2000The Indian rupee on Thursday strengthened against the US dollar after the government increased tariffs on imported goods to narrow current account deficit. At 9.15am, the rupee was trading at 72.40 a dollar, up 0.30% from its Wednesday’s close of 72.62. The home currency opened at 72.41 per dollar. The 10-year gilt yield stood at 8.04%, below its previous close of 8.072%. Bond yields and prices move in opposite directions

On Wednesday, the government raised import duties on 19 non-essential items, including refrigerators, air conditioners, jewellery, diamonds and jet fuel, accounting for annual imports worth ₹86,000 crore, to arrest a widening current account deficit (CAD) and a weakening rupee.

Earlier, the Reserve Bank of India eased rules to maintain the liquidity coverage ratio. RBI increases ability of banks to avail liquidity from the repo markets against high-quality collateral. “Going forward, the Reserve Bank stands ready to meet the durable liquidity requirements of the system through various available instruments depending on its dynamic assessment of the evolving liquidity and market conditions”, RBI said in a note.

Benchmark Sensex Index rose 0.47% to 170.53 points. Year to date, it gained 7.3%.

So far this year, the rupee has declined 11.5%, while foreign investors have sold $1.76 billion and $6.83 billion in the equity and debt markets, respectively.

Asian currencies were trading higher as traders assessed commentary from the Federal Reserve that reaffirmed the U.S. economy is strong enough to warrant another interest-rate increase by the end of this year.

South Korean won was up 0.55%, Taiwan dollar 0.40%, China offshore 0.18%, Philippines peso 0.12%, Indonesian rupiah 0.12%, China Renminbi 0.11%, Singapore dollar 0.08%.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 94.288, up 0.10% from its previous close of 94.193.

Source://www.livemint.com/Money/uOQHwOR1oXntoF3HvhruSK/Rupee-gains-against-dollar-as-govt-hikes-import-duties.html

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