The rupee closed at 95.78, versus its previous close of 95.70. The 10- year bond yielded 7%, nearly unchanged from its previous close of 7.01%.
The currency traded in a narrow range from 95.59 and 95.80 on the day, and intervention by the Reserve Bank of India (RBI) helped contain the depreciation past 95.80 levels, traders said.
Intervention by the RBI has been stronger after the rupee hit its record low of 96.96 on May 20, as the central bank tried to prevent a fall past the 97 per dollar mark.
“Markets were in a wait and watch mood on Thursday as key announcements – RBI policy and some announcements to uplift the currency – are expected. However, there was dollar demand for oil companies as peace talks between Iran and US have not yet come to a solution,” Anil Bhansali, head of treasury at Finrex Treasury Advisors.
The one month forward premium stood at 3.27% on Thursday, versus 3.42% previously. The one year forward premium was at 3.02%, versus 2.90% previously.
A cut in capital gains tax on foreign investment in government bonds might be one of the ways to boost inflows, ET reported Thursday. The monetary policy decision would provide further cues to the bond and currency markets.
