The rupee was trading weak by 57 paise at 62.34 per dollar at 3.57 p.m. local time after RBI raised the repo rate (the rate at which banks borrow from RBI) by 25 basis points in its monetary policy announcement today.

The domestic unit shed 27 paise to 62.04 per dollar in the opening trade against the previous close of 61.77 due to fresh demand for dollar from importers ahead of the RBI mid-quarter monetary policy review amid a weak opening in the domestic stock market.

The local currency rallied yesterday due to the US Fed plans to continue with its quantitative easing programme.

US Federal Reserve chief Ben Bernanke had said that the Fed could still begin reducing its asset purchases, which are aimed at holding down long-term interest rates, in the next three months only if the outlook for the US economy strengthens.

Ashok Gautam, Senior Vice-President and Head Global Markets, Axis Bank, said: “The rupee will remain at 61-63 levels with an upward bias towards 60 a dollar.

“However, the RBI must not allow the rupee to appreciate much as it could affect our exports.”

Call rates, G-Secs

Yields on the 10-year benchmark 7.16 per cent government bond, which matures in 2023, jumped to 8.35 per cent from 8.19 per cent. Prices of the 10-year bond fell to Rs 92.10 after opening at Rs 93.20.

Inter-bank call money rates, the rates at which banks borrow from each other to meet their short-term funding needs, opened higher at 10.35 per cent from the previous close of 10.10 per cent.

deepa.nair@thehindu.co.in

(This article was published on September 20, 2013)
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