After hitting a record low of 58.96, the rupee recovered to 58.34 against the dollar at 3.15 p.m. local time on Tuesday after the Finance Ministry said that the domestic unit will stabilise in the next 3-4 days on FII inflows.

Persistent dollar demand from banks and importers and heavy capital outflows weighed down on the rupee sentiment.

On Monday, the rupee sank 110 paise at a life-time low of 58.15 against the dollar hurt by outflows of the American currency and weak macro-economic indicators.

Dealers said the rupee continues to face challenges from India’s rising current account deficit (CAD) and overseas economic data and policy decisions.

The rupee depreciation can stoke inflation in the Indian economy, which imports 80 per cent of its crude oil requirement.

A weakening rupee makes import of goods and services and overseas travel dearer. There are also major worries about the expanding current account deficit.

Intra-day range for the rupee is expected at between 58.25-58.80 levels.

In New York, the US dollar gained against the Japanese yen yesterday as more investors anticipated the Bank of Japan could unveil additional easing efforts at its policy meeting.

The interbank call money rates opened flat at 7.30 per cent from their previous close.

The 8.15 per cent government security (G-Sec), which matures in 2022, opened flat at Rs 104.25. Yields remained at 7.49 per cent.

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(This article was published on June 11, 2013)
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