The Indian rupee started marginally higher on Wednesday and advanced slightly further from the day's open so far. However, the domestic equities floating in the negative terrain and a battered euro overnight against the greenback restricted rupee gains. Rupee commenced at Rs. 46.82 per dollar, a mere 2 paise up from the previous closing price. Meanwhile, with the domestic shares as well as the European unit slowly paring its early loses are likely to support the domestic currency through the day.
Spot rupee commenced on Wednesday at 46.82. The partially convertible currency hit an intra day high at 46.70 and registered an intra day low at 46.83 so far during the day, as per data from CCIL. Rupee was last seen trading at 46.71 by around 11.35 IST, higher by around 13 paise or 0.27% as compared to the previous closing price at 46.84.
The domestic share market edged lower at the onset of the trading session on weak Asian stocks following the Wall Street lower. Worries about Europe's banks resurfaced on Tuesday after a Wall Street Journal analysis revealed that Europe's recent stress tests of the strength of major banks understated some lenders' holdings of potentially risky government debt. Meanwhile, Japanese stocks led a broad-based decline in Asian stocks as the yen hit a fresh 15-year high against the dollar. The key benchmark indices moved in a narrow band after slowly recovering from lower level in early trade. India's BSE Sensex was down 2.89 points at 18642.17.
Meanwhile, worries resurfacing about the European banking system send the European common currency lower late on Tuesday against the US dollar. Markets across the globe also retreated from the previous week's gains and risk aversion was back in picture. The dollar dropped to its fresh 15-year low of 83.48 against the yen on Wednesday. The yen was also bolstered after comments from BOJ Governor Masaaki Shirakawa increased speculation that Japan was not preparing to act to stem the yen's strength in the near term. Meanwhile, the Dollar Index, which tracks the dollar against a trade-weighted basket of currencies, was down by 0.14% at 82.71.
In the domestic currency futures market on the NSE, the front month September contract opened on Wednesday at 46.94 per dollar mark and was trading weaker than the spot rupee. The contract hit an intra day high at 46.94 and registered a low at around 46.81 so far during the day. Rupee was last seen trading at 46.82, up 16 paise or 0.34% as compared to the previous close at 46.98. Meanwhile, the rupee contract on the MCX was trading close to the NSE contract and was last seen at 46.82 as against the previous closing price at 46.98. Rupee will likely find an intra day support at 46.75 for the futures quotes on both the exchanges.
In the domestic bond market, the yield on most traded 10-year benchmark federal paper, 7.80% GS 2020, eased 2 bps to trade at 7.93% during the morning trade at around 11.30 AM IST, compared to 7.95% at close in the previous trading session. The bond yields eased during the morning trade tracking U.S. treasury yields that closed low yesterday. The U.S. treasury yields closed low yesterday, owing to worries about Europe's financial sector and a strong three-year auction that lifted the debt prices.
Meanwhile, in commodities, light sweet crude oil for October delivery was down 30 cents to US$ 73.79 on the GLOBEX division of New York mercantile exchange.