At 12:00 PM (IST), the partially convertible Indian currency was at 45.10 per dollar, stronger than the previous close of 44.6450. The rupee earlier touched a day's high of 44.8850 and a day's low of 45.1050. It had opened at 44.90.
The rupee declined against the dollar on Wednesday, snapping six successive days of gains owing to weakness in local stocks and the greenback's recovery against the major rivals in the overseas markets.
At 12:00 PM (IST), the partially convertible Indian currency was at 45.10 per dollar, stronger than the previous close of 44.6450. The rupee earlier touched a day's high of 44.8850 and a day's low of 45.1050. It had opened at 44.90.
Last week, the rupee had gained 1.6%, its best weekly gain in two months.
The BSE Sensex was down 0.85% at 19,764 after being as low as 19,713 as investors chose to stay on the sidelines due to global economic concerns and mixed Asian markets.
Foreign funds have pumped in a record US$29bn into Indian shares in 2010 after pouring US$17.5bn last year. Overseas investors have also bought a record US$9.6bn of Indian bonds this year.
The rupee has gained around 4% this year after rising 4.7% last year. The Indian currency has advanced 1.8% this month, the best performance among Asia’s 10-most traded currencies.
The dollar gained ground on Wednesday, extending gains made in the previous session after the US government outlined an extension of tax breaks and a US government bond auction met tepid demand.
The dollar index, which measures the greenback’s performance against a basket of six other currencies, rose by nearly 0.5% to 80.22 in Asia, up from 79.973 in late North American trading on Tuesday.
The euro traded at US$1.3224, down 0.3% the from Tuesday.
The dollar was trading at 83.84 Japanese yen up from ¥83.51 on Tuesday.
US Treasury yields climbed yesterday after President Barack Obama said he would accept lower tax rates on high earners’ income, dividends, capital gains and multimillion dollar estates for two years in exchange for extending federal unemployment insurance.
The current tax rates, enacted in 2001 and 2003, were set to increase on Dec. 31.
Moody’s Investors Service Inc. said yesterday that Obama’s agreement to extend the tax cuts won’t lead to a downgrade of the nation’s Aaa credit rating.
Losses in the euro were limited as Irish Finance Minister Brian Lenihan won the backing of lawmakers in the first votes on his €6bn (US$8bn) budget.
Irish lawmakers late yesterday passed an initial series of votes on the budget in parliament in Dublin. The government is under pressure to pass the legislation to secure an €85bn bailout.
The International Monetary Fund Managing Director Dominique Strauss-Kahn said that the European Union (EU) needs to find a comprehensive solution to its debt crisis and not rely on a case-by-case method.
“It’s not a good solution to find a solution for every country,” Strauss-Kahn said in Athens.
Separately, the won declined after television broadcaster YTN reported that artillery shells were fired into North Korean waters today. The shells fell near South Korea’s Baengyeong Island and may have been fired by North Korea, according to the report.
The won dropped 1.3% to 1,146.10 per dollar.
The currency also weakened after the Bank of Korea said that the nation’s current-account surplus was less than previously reported in the first 10 months of the year under new calculating rules.
South Korea’s central bank estimated the surplus during the first 10 months of the year was US$23.17bn as opposed to US$29bn earlier.
