The rupee closed lower at 57.13 per US dollar on a weak euro and increasing dollar demand from oil importers.

The Indian unit had closed at 57.02 on Tuesday.

Traders will expect month-end dollar demand from state-run oil refiners leading to a fall in the domestic currency. On Friday, the rupee closed at a record low of 57.33.

The RBI announced a slew of measures on Monday that proved to be a disappointment for the markets.

The measures include the FII investment limit in government securities by $5 billion to $20 billion, increasing the ECB limit by $10 billion and rationalising FII investments in infrastructure funds and facilitating QFI investment in mutual funds with investments in the infrastructure.

According to Mr. Rohit Bammi, Patrner, KPMG India, “No decisive government action was seen on the policy front against expectations of FDI liberalisation, NRI focused bond issues, policy reform, etc.”

However, the increase in the government bonds limit is certainly beneficial for the bond markets in the medium term, while the ECB announcements are unlikely to have any meaningful impact on the Rupee level in the near term, Mr. Bammi added.

Call Rates and G-Secs

The inter-bank call rates closed a tad higher at 8.10 per cent from its previous close of 8 per cent. It moved in the range of 7.75 to 8.15 per cent. The call rates market had opened at 8.15 per cent.

With less volatility, the benchmark 8.79 per cent government bond maturing in 2021 closed lower at Rs 102.76 (with a yield of 8.35 per cent) from Tuesday’s close of Rs 102.84 (with a yield of 8.34 per cent).

(This article was published on June 27, 2012)
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