The USDINR pair made a gap down opening at 74.43 levels and traded in the range of 74.34-74.52 with a sideways bias. The pair finally closed the day at 74.46 levels. The rupee remained up against the US dollar because foreign banks sold the US unit likely on behalf of overseas investment into Indian companies looking to raise capital from offshore investors and also because the US Dollar came off its earlier highs after risk appetite among global investors improved. The Indian unit was also supported due to a rise in domestic benchmark indices.
Overnight indexed swap rates ended higher today as traders paid fixed interest rates, tracking a surge in US Treasury yields and crude oil prices, which rebounded from their multi-month lows on Wednesday. On an annualized basis, the premium on the one-year, exact-period dollar/rupee contract rose to 4.50%, against 4.46% Tuesday. The RBI set the reference rate for USDINR at 74.36 levels. The new 10-year G-Sec benchmark 06.10 GS 2031 closed the day at 6.1373 levels.
Oil prices rose, extending strong gains made in previous sessions on expectations of tighter supplies until the end of the year as economies recover from the coronavirus crisis. The ECB left eurozone interest rates unchanged and signalled they were likely to stay that way for some time. The central bank kept other monetary policy tools on hold in its regular update, in line with market expectations. The bank revised its forward guidance on rates, taking a more dovish stance.
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