Firmness prevailed on the money market on Friday as the rupee did not move any side against the dollar in the process of trading, dealers said. The rupee was inert against the dollar for buying and selling at Rs 104.85 and Rs 104.86 respectively, they said.
In the fourth trade, the dollar licked its wounds, wallowing at five-week lows against a currency basket and on track for weekly losses after the US Federal Reserve signalled fewer interest rate hikes than some investors had expected.
Although the US central bank delivered an interest rate increase on Wednesday as widely anticipated, it did not alter its earlier forecast for a total of three rate increases this year.
That disappointed dollar bulls who had hoped for hints of a possible fourth hike in 2017. The dollar index, which gauges the greenback against a basket of six major rivals, edged down 0.1 percent to 100.26, after earlier coming within a tick of the overnight low of 100.21, its lowest level since February 9. It was down one percent for the week. Against the yen, the dollar edged up 0.1 percent to 113.44, down 1.2 percent for the week ahead of a Tokyo public holiday on Monday.
The yen gained despite sharply diverging monetary policy expectations. On Thursday, the Bank of Japan held its policy steady as expected and maintained a pledge to cap long-term interest rates around zero. BOJ Governor Haruhiko Kuroda said an up-tick in inflation toward 1 percent won't immediately trigger an interest rate hike, signalling that Japan will stick to its ultra-easy policy even as other major economies eye withdrawing stimulus.
Kuroda, who heads to Germany for a Group of 20 finance leaders' meeting this weekend, shrugged off market speculation the BOJ may raise its target on bond yields later this year, when consumer inflation is expected to approach 1 percent due mostly to a rebound in fuel costs and rising import prices from a weak yen.
"The Fed is going to continue to continue to hike rates, so we don't see any reason to aggressively buy the yen more," said Masashi Murata, senior strategist at Brown Brothers Harriman in Tokyo. US data on Thursday underscored the US economy's solid underpinnings. Homebuilding increased 3.0 percent last month and jobless claims fell in the latest week. The dollar was trading against the Indian rupee at Rs 65.578, the greenback was at 4.441 in terms of the Malaysian ringgit and the US currency was at 6.902 versus the Chinese yuan.
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Open Bid Rs.106.50
Open Offer Rs.106.70
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Bid Rate Rs.104.85
Offer Rate Rs.104.86
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According to currency dealers, the US dollar resumed trading on a positive note following fresh buying in the market. As a result, it appreciated and ended at Rs 106.75 and Rs 107.10 on buying and selling sides, respectively, as compared to the overnight closing rates of Rs 106.50 and Rs 106.90 respectively, they added.
Similarly, the national currency also followed the same suit versus the pound sterling. The pound's buying and selling further increased from Thursday's closing rates of Rs 129.50 and Rs 130.50 to Rs 130.80 and Rs 131.50 respectively, they said.
The dollar opened at Rs 106 (buying) and Rs 106.50 (selling) against last rate of Rs 107.50 (buying) and Rs 107.60 (selling). It closed at the same rate of Rs 106 (buying) and Rs 106.50 (selling).
Pound Sterling opened at Rs 130 (buying) and Rs 131.50 (selling). It closed at the same rate.