The rupee dropped to a two-month low after the government said it may not meet its budget-deficit target for the current financial year.
The currency weakened 2.4 per cent this month, as foreign investors sold $1.7 billion more Indian shares than they bought, exchange data show.
The rupee slid 0.3 per cent to 45.3325 per dollar at close in Mumbai, according to data compiled by Bloomberg. It touched 45.43 earlier, the weakest level since March 17.
BOND YIELDS NEAR 32-MONTH HIGH
India’s 10-year bonds were little changed, with yields near the highest level in almost 32 months, on speculation demand for existing notes will slow as central and state governments sell new debt. Four state governments raised a combined $882 million on Wednesday, selling debt maturing in 2021, the central bank had said on Tuesday. Speculation that the central bank will add to this year’s three interest-rate increases to cool inflation also weighed on debt markets.
The yield on the most-traded 7.8 per cent note due April 2021 was little changed at 8.37 per cent at close in Mumbai, according to the central bank’s trading system.
CALL RATE DROPS
THE call rate dropped on the overnight call money market here on Wednesday on surfeit of liquidity. The overnight call money rate settled at the day's low of 7.00 per cent from 7.50 on Tuesday. It moved in a range of 7.50 per cent and 7.00 per cent.