The Rupee fell to the lowest levels in a week after central bank Governor Duvvuri Subbarao said high inflation had reduced room for policy measures to spur the nation’s economic growth. The rupee declined 0.6 per cent to 55.6 per dollar in Mumbai, according to data compiled by Bloomberg. “Inflation is high, oil prices, though they have come off $100 a barrel, are at elevated levels, the external sector is under stress,” Subbarao said in Kerala yesterday. “There is just no space for fiscal or monetary response.”
Bonds end weak
Government bonds dropped on heavy selling pressure from banks and companies. The 8.15 per cent government security maturing in 2022 dipped to Rs 99.5 from Rs 99.6 previously, while its yield moved up to 8.22 per cent from 8.20 per cent. The 8.33 per cent government security maturing in 2026 fell to Rs 99.5 from Rs 99.6, while its yield edged up 8.39 per cent from 8.37 per cent.
Call rates decline
Call money rates eased at the overnight market today due to lack of demand from borrowing banks. The rate finished lower at 8.05 per cent. It moved in a range of 8.1 per cent and 7.8 per cent. The Reserve Bank of India, under the liquidity adjustment facility, purchased securities worth Rs 734.7 crore from 34 bids at the two-day repo auction, at a fixed rate of eight per cent.