MUMBAI : The Indian rupee on Wednesday strengthened against the dollar as the country’s current account deficit narrowed in the September quarter. Traders will watch geopolitical developments after North Korea said it was no longer bound to freeze major weapon tests.
Rupee closed at 71.23 a dollar, up 0.22% from its previous close of 71.38. The currency opened at a 71.45 dollar, touching a high of 71.23 and a low of 71.45.
India’s current account deficit narrowed in the September quarter, helped by a shrinking trade gap and an increase in earnings from services exports and remittances. The shortfall was $6.3 bln in July-September, or 0.9% of gross domestic product, the Reserve Bank of India said on Tuesday.
The 10-year government bond yield stood at 5.505% from its Tuesday’s close of 6.555%. Benchmark Sensex was at 41,306.46, up 0.13%.
Last year, foreign investors bought $14.51 billion and $3.57 billion in equity and debt markets, respectively.
Meanwhile, finance minister Nirmala Sitharaman on Tuesday unveiled a plan to invest ₹102 trillion over five years to develop social and economic infrastructure to boost India’s sagging growth. The projects will be implemented under the National Infrastructure Pipeline (NIP) mechanism. A task force for the purpose, set up under economic affairs secretary Atanu Chakraborty, submitted its first report after consultation with infrastructure-related ministries, lenders, states and companies over the past four months.
Developments on the US-China trade deal front also boosted sentiment in markets. On Tuesday, US President Donald Trump said on Twitter that the Phase 1 of the trade deal would be signed on 15 January at the White House, bolstering widespread expectations of a finalized preliminary agreement in early 2020.
Many Asian markets are closed on account of new year. Japanese Yen gained marginally, while Singapore Dollar and Offshore Chinese Renminbi were a tad down.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 96.951, up 0.58% from its previous close of 96.389.
(Bloomberg contributed to the story).