Government bonds strengthened on Thursday as traders covered short positions following the US Federal Reserve Committee’s announcement of no further rate hikes. However, the US rate-setting panel indicated that interest rates would remain elevated for an extended period, potentially delaying expectations for rate cuts.
The yield on the benchmark 10-year government bond fell by three basis points to settle at 7.16 per cent, against 7.19 per cent on Tuesday. Money markets were shut on Wednesday on account of Maharashtra Day.
On the other hand, the Indian rupee held steady within a tight band, fluctuating between 83.41 and 83.49 against the US dollar throughout the day. This stability was influenced by foreign portfolio investors purchasing dollars, countered by the Reserve Bank of India’s intervention through dollar sales near the upper limit of 83.49 a dollar. Foreign portfolio investors have been consistently pulling out from both debt and equity markets over the past 15 days, amounting to a net total of $2.3 billion in sales.
The local unit settled at 83.47 a dollar on Thursday, against 83.44 a dollar on Tuesday.
The Dollar Index and the US treasury yields remained steady during the day. The US Federal Reserve kept the federal fund target range unchanged at 5.25 per cent to 5.50 per cent for the sixth consecutive policy meeting.
“The dollar index exhibited weakness following Powell’s speech late yesterday evening but maintained key levels around 105.25. The upcoming Nonfarm Payroll and unemployment data release on Friday will be crucial in determining the further trend in currencies,” said Jateen Trivedi, vice president, research analyst – commodity and currency, LKP Securities.
The market now awaits non-farm payroll data to be released on Friday after Indian market hours for further cues. The rupee is expected to trade in a range of 83.35 a dollar to 83.55 a dollar on Friday.
First Published: May 02 2024 | 6:02 PM IST
