The rupee fell to a record low of 61.80 on Tuesday, on persistent dollar demand from importers, but later recovered to end at 60.77 after intervention by the Reserve Bank of India.

“Comments by Finance Minister on the sovereign bond issue, consistent selling by state-run banks and the appointment of the new RBI chief helped in propping up the currency,” said S. Srinivasaraghavan, Executive Vice-President and Head- Treasury at Dhanlaxmi Bank.

The rupee opened sharply lower at 61.11 a dollar on Tuesday against the previous close of 60.88 a dollar on the back of a strong dollar demand from importers.

According to Abhisek Goenka, Founder and CEO, India Forex Advisors, “The rupee recovered drastically after making a new record low of 61.80 levels on account of RBI intervention. The free fall was seen after the rupee touched 66 plus levels in offshore market, making the speculators active to buy heavily in the spot market. The increasing speculation over rupee’s weakness is seen deteriorating the sentiments and making the local exporters and importers its victim.”

CALL RATES, BOND YIELDS

The inter-bank call money rates, the rates at which banks borrow short-term funds from each other, ended lower at 9 per cent from the previous close 9.75 per cent. The benchmark 7.16 per cent government security, which matures in 2023, ended higher at Rs 93.09 from the previous close of Rs 92.75. Yields on the security softened to 8.19 per cent from the previous close of 8.25 per cent.

deepa.nair@thehindu.co.in

(This article was published on August 6, 2013)
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