The rupee slipped almost 50 paise against the dollar to close at a low of 54.36 after the domestic equity market was disappointed by the not-so-encouraging Union Budget announced on Thursday.
The domestic unit opened stronger at 53.63 per dollar from Wednesday’s close of 53.87 on the Interbank Foreign Exchange market. Reacting sharply to the Union Budget, the rupee fell to a low of 54.48 before recovering to the day’s close.
According to an agency report, the unit dropped 2.1 per cent in February, marking its biggest monthly fall since May 2012.
An increase in expenditure for the fiscal year 2013-14 affected the market sentiment.
“The reaction was sentimental. Despite the measures announced on the foreign direct investment, the Budget was not as encouraging for the markets,” said Vivek Mhatre, General Manager, Treasury, Union Bank of India.
Abhishek Goenka, Founder and CEO, India Forex Advisors, still maintains a weaker outlook on rupee in the days to come “targeting 55 levels soon”.
The inter-bank call money rates ended almost flat at 7.80 per cent from its previous close of 7.85 per cent on Wednesday.
Call rates and G-Secs
The inter-bank call money rates opened higher at 7.90 per cent from their previous close of 7.85 per cent on Wednesday. Currently, the rates were trading at 7.80 per cent.
The widely traded 8.15 per cent government security, which matures in 2022, fell sharply to Rs 101.80 from its previous close of Rs 102.28, while the yields rose to 7.87 per cent from Wednesday’s close of 7.79 per cent.