Halting its three-day winning run, the rupee on Wednesday declined by 13 paise to close at 73.18 (provisional) against the US dollar in line with the fall in the domestic equity market. At the interbank foreign exchange market, the domestic currency opened at 73.02 against the American currency, but pared the gains to close at 73.18, registering a decline of 13 paise over its previous close. During the session, the local unit hit an intra-day high of 72.93 and a low of 73.18. On Tuesday, the rupee had closed at 73.05 against the US dollar. Meanwhile, the dollar index, which gauges the greenback s strength against a basket of six currencies, rose 0.20 per cent to 89.93.
Demand for precious gold is expected to be lukewarm this Akshaya Tritiya, being observed on Friday, as localized lockdowns to control the spread of Covid infections will keep most jeweler shops shut.
The occasion is considered auspicious by many to purchase gold, silver and other metals in India the world s second-biggest bullion consumer. This will be the second year in a row that pandemic-related restrictions will hurt jewellery sales on the otherwise busiest business day in bullion trade.
Analysts and wealth advisers say those eager to make bullion purchases this Akshaya Tritiya can go for paper gold options like sovereign gold bonds, gold futures, exchange-traded funds, fund of funds or digital gold.
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Gaurang Mehta, who owns a restaurant on the outskirts of Mumbai, is worried about the future of his business.
Things were just starting to pick up after it was hit hard by nationwide lockdown restrictions in India last year. It therefore came as a huge shock to him and many other business owners when the local government imposed fresh curbs this month amid a record surge in Covid-19 infections. These include only allowing restaurants in the state to offer deliveries.
“I won t be able to pay the rent and I won t be able to pay salaries,” says Mr Mehta. “Our problems will only increase.”
After suffering its biggest one-day fall since August 2019 on Wednesday, the rupee appreciated by 10 paise on Thursday to quote at 74.37 against the US dollar in intraday deals. It nosedived 1.52 per cent on April 7 and closed at 74.56 to a dollar the lowest since November 13, 2020. The local currency came under pressure after the Reserve Bank of India (RBI) committed to buying Rs 1 trillion bonds from the secondary markets in the first quarter of fiscal year 2021-22 (Q1FY22). The 10-year bond yields fell as low as 6.06 per cent after the monetary policy announcement on Wednesday. The fall in yield, however, tightened the spread between the yield on 10-year India government bond and US 10-year government bond. The yield spread is now down to 4.42 per cent, from 5.76 per cent in April last year, and the three-year average of 4.9 per cent. Generally, when the yield spread tightens against a certain currency, then that currency depreciates against other currencies, which possibl