The rupee fell to a near two-week low to end at 61.90 against the dollar on Tuesday due to dollar demand from importers and banks. In the opening trade, the domestic unit gained 11 paise to 61.52 against the previous close of 61.63 on the back of weakness in the dollar index.

However, paring gains due to persistent dollar demand from a large state-run bank, the rupee declined to 61.94 per dollar in afternoon trades. Dealers claimed that the demand could have been to meet the government’s defence-related purchases.

The rupee hovered in the 61.45-61.94/$ range during the day. Meanwhile, BSE-benchmark Sensex ended higher by 46 points (0.22 per cent) at 21,251 points at day’s close.

Call rates drop, bond yields up

The inter-bank call money rate, the rate at which banks borrow short-term money from each other, ended weaker at 8.20 per cent from the previous close of 8.55 per cent.

According to Abhishek Goenka, Founder and CEO of India Forex Advisors, the Government may not need to borrow as much from the market as it had budgeted, since it is flush with money, which in turn should see interest rates softening. Yield on the benchmark 8.83 per cent government bond, maturing in 2023, hardened to 8.55 per cent from Monday’s close of 8.51 per cent. Prices declined to Rs 101.79 from Rs 102.04.

(This article was published on January 21, 2014)
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