The rupee on Wednesday snapped its three-day gaining streak to end lower by 20 paise at 51.90/91 against the American currency on emergence of the dollar’s demand from importers.
At the Interbank Foreign Exchange (Forex) market, the domestic unit opened weak at 51.84/85 a dollar. Later, it moved erratically in a range of 51.53 and 51.92, before concluding at 51.90/91, showing a fall of 0.39 per cent.
In last straight three trading days, the rupee had gained 128 paise, or 2.42 per cent. Traders said little action in the stock market too weighed on the rupee.
The BSE benchmark Sensex ended up by mere 10.77 points, or 0.07 per cent, at 16,175.8. They, however, added that continued foreign funds inflow in debt as well as equities cushioned the rupee’s steep fall. Foreign institutional investors pumped in $ 1.9 billion in the debt markets and $274.7 million in equities in the current month till January 10, which limited the rupee fall.
Bonds drop a second day
10-year bonds dropped for a second day on speculation that increasing government debt sales will damp demand for existing securities. The finance ministry will auction Rs 14,000 crore ($2.7 billion) of notes due in 2020, 2024 and 2030 on January 13, according to the central bank. Ten Indian states raised a total Rs 9,170 crore selling 10-year bonds yesterday. The government boosted its borrowing programme for the financial year ending March 31, by 8.5 per cent last month to a record Rs 5.1 lakh crore.
“Bond supplies are continuing unabated, pushing up yields,” said M Natarajan, Mumbai-based head of treasury at Bank of Nova Scotia.
Call rate low
The call rate finished lower on the overnight call money market owing to lack of demand from borrowing banks. It ended lower at 8.50 per cent from yesterday's 8.65 per cent.