The rupee suffered the worst fall in 16 years in November, plunging nearly seven per cent and hitting a record low, as persistent dollar demand from importers and portfolio outflows due to global risk aversion pounded the local unit.
The rupee continues to face further depreciation threats on the back of a gaping current account deficit and slowing growth. The worst performer among its Asian peers, the rupee has lost 6.7 per cent during the month, taking its fall so far in 2011 to 14.37 per cent. On Wednesday, it closed at 52.20/21 per dollar, 0.35 per cent weaker than Tuesday's close, recovering from the day's low of 52.42 after China cut its banks' reserve requirement ratio by 50 basis points, which aided global risk appetite.
Bonds shoot up
Government securities shot up further after the Reserve Bank of India (RBI) said it would buy back another Rs 100 billion worth of bonds tomorrow, as on November 24, as also slowed down in economic growth in the second quarter of 2011-12, which gives the apex bank room to consider easing monetary policy.
The 8.79 per cent government security maturing in 2021 flared upto Rs 100.33 from Rs 99.76, while its yield tumbled to 8.74 per cent from 8.83 per cent yesterday.
The 9.15 per cent government security maturing in 2024 also spurted to Rs 102.34 from Rs 101.55 previously, while its yield plunged to 8.84 per cent from 8.94 per cent.
Call rate firms up
The call money rate firmed up too on the overnight market on Wednesday a shortage on funds in the system. It moved in a range of 8.70 per cent and 8.45 per cent before settling at 8.55 per cent from 8.50 per cent.
