The rupee closed weaker at 58.78 against the dollar as demand for the American currency from oil importers outweighed the supply.
The Indian unit had closed at 58.63 on Tuesday. Intraday, the rupee moved in the 58.68 – 58.86 range.
The Reserve Bank of India is stacking up dollar reserves to cap the sharp appreciation of the rupee due to a change at the Central Government. The Narendra Modi-led Government is seen to be pro-market which led the rupee to strengthen to an 11-month high since last week.
A sharp appreciation in rupee is likely to hit export competitiveness of the country’s trade.
Call rates, G-Sec yields
The overnight call money rate (the rate at which banks borrow money from each other to overcome short-term liquidity mismatches) closed higher at 7.75 per cent against the previous close of 7.50 per cent.
The yield on the benchmark 8.33 per cent, maturing in 2023, closed at 8.76 per cent. The price of the security closed at Rs 100.39. Bond yields and prices move in opposite directions.
Treasury officials said that the yields may touch 10 per cent levels if the government plans to borrow more capital as expected by the market participants.