Recovering from early lows, the rupee on Wednesday closed higher by five paise at 52.97/98 against the US currency on fag-end dollar selling by some banks and exporters.
After opening weak at 53.10/11, the rupee fell to the day’s low of 53.44 due to month-end dollar demand from importers, mainly refiners, and weak local stocks. Later in the day, it managed to recover lost ground amid speculations of intervention by the Reserve Bank of India (RBI) to arrest the slide.
RBI’s role in forex markets could not be ascertained. “RBI is speculated to intervene in the market at 53.30 levels to curtail the weakness,” said India Forex Advisors chief executive, Abhishek Goenka. “There was some kind of intervention (by RBI) when the rupee touched Rs 53.30 level, after which it recouped,” T S Srinivasan, general manager (treasury), Indian Overseas Bank, said, adding the rupee would remain weak in the near term. The dollar index was down by about 0.1 per cent against a basket of currencies while New York crude oil was trading just below $101 a barrel in the European market on Wednesday.
Bonds decline
10-year bonds declined on concern that slowing economic growth would hurt tax revenue and prompt the government to boost debt sales.
Yields rose before the finance ministry sells Rs 15,000 crore of notes due in 2017, 2024, 2027 and 2041 tomorrow, part of the government’s Rs 4.7-lakh crore borrowing programme for the year through March. Industrial production contracted 5.1 per cent in October from a year earlier, the first drop since June 2009, official data showed this month. “Government borrowing is going to be higher, as budget figures aren’t matching up,” said Pradeep Madhav, managing director at Mumbai-based STCI Primary Dealer Ltd. “They may borrow up to Rs 400,000 crore in addition to the current target.”
Call rate stable
The call rate remained stable at the overnight money market on Wednesday on alternate bouts of demand and supply. The rate closed stable at its previous closing level of 8.50 per cent. It moved in a range of 9.10 per cent and 8.25 per cent.
