The rupee breached the 57 per dollar mark, when it briefly touched the figure in early trade today.

The Indian unit is seen nearing its all-time low witnessed in last June, when it touched 57.32.

In intraday trade, at 12.30 p.m. local time, the Indian currency was trading higher at 56.87 on some dollar selling by exporters. This is, however, still lower than the previous close of 56.72.

Bond-buying programme

The rupee opened at 56.95 against the American currency. The Indian unit has been battered by weak Asian equity markets and unclear signs from the US over continuity of its massive bond-buying programme.

The US bond-buying programme pumps liquidity into the markets worth $85 billion every month. Some of this money finds its way to the Indian shores offering strength to the Indian unit.

High current account deficit

The rupee faces challenges from India’s high current account deficit (CAD) and overseas economic data and policy decisions.

The Government has tried to put sands into the wheel of India’s galloping CAD by putting several restrictions on gold imports over the past few days. Will it help in bringing down the CAD and help the rupee remains to be seen.

A lower rupee hurts importers because they have to pay more Indian unit for every dollar worth of goods they import.

Call rates, G-Sec

The overnight call money rates opened higher at 7.30 per cent from the previous close of 7.25 per cent. At 12.30 p.m. local time, the rates were trading higher at 7.35 per cent.

The 8.15 per cent government security (G-Sec), which matures in 2022, opened almost flat at Rs 104.85 from the previous close of Rs 104.83. Yields were stable at 7.40 per cent.

G-Secs were trading at Rs 104.75 at a yield of 7.42 in intraday trade.

satyanarayan.iyer@thehindu.co.in

comment COMMENT NOW