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The rupee fell 24 paise to end lower at 59.40 to the dollar against the previous close of 59.16 after the Reserve Bank of India kept the key policy rates unchanged in its second bi-monthly monetary policy.
In intra-day trade, the domestic unit touched a high of 59.12 and a low of 59.42. Forex dealers said besides the dollar’s gains against other currencies overseas, increased demand for the American currency from oil importers also put pressure on the rupee amid custodian inflows in domestic equity market.
Call rates jump, bond yields slump
The overnight call money rate (the rate at which banks borrow money from each other to overcome short-term liquidity mismatches) ended higher at 8.25 per cent from 7.10 per cent. The yield on the benchmark 8.33 per cent, maturing in 2023, softened sharply to 8.59 per cent from the previous close of 8.66 per cent. The price of the security rose to ₹101.48 from ₹101.08.
NS Venkatesh, Executive Director and Head of Treasury, IDBI Bank, said: “The benchmark yields have eased by around 10 basis points as the market has taken comfort from the Governor’s dovish tone in the policy.
The market will wait for further cues from the bond auction of ₹16,000 crore scheduled on Friday.” Bond yields and prices move in opposite directions.
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