The Indian rupee snapped yesterday losses and opened higher on Tuesday after RBI decided to transfer a sum of Rs1,76,051cr to the Government of India (GoI) comprising of Rs1,23,414cr of surplus for the year 2018-19 and Rs52,637cr of excess provisions identified as per the revised Economic Capital Framework (ECF) adopted at the meeting of the Central Board on Monday.
Currently, the local unit is trading higher by 22 paise at 71.80 against US Dollar. The 10-year bond yields also softened to 6.41%.
According to this decision, the RBI board has accepted the recommendation of the Jalan Committee to transfer the surplus amount.
It may be recalled that the RBI, in consultation with the Government of India, had constituted an Expert Committee to Review the Extant Economic Capital Framework of the Reserve Bank of India (Chairman: Dr Bimal Jalan). The Committee has since submitted its report to the Governor of the RBI.
The local unit on Monday fell by 36 paise to end below 72/$.
Among other currencies, the yen rose as some investors tempered their optimism about the chances for a quick resolution to the US-China trade war, which boosted so-called risk-off trades.
The dollar came under additional pressure versus the yen as a decline in US Treasury yields showed some investors still favoured the safety of government debt.
Speaking on the sidelines of the G7 summit of world leaders in France on Monday, US President Donald Trump said Chinese officials had contacted US trade counterparts overnight and offered to return to the negotiating table, the media report added.