After touching 63 levels, the rupee today closed sharply weaker at 62.97 against the dollar tracking heavy outflows from the domestic equity market and fresh dollar buying from importers and banks.
The local currency edged up at 62.48 per dollar in the opening trade from Thursday's close of 62.51. In the early trades, it further strengthened to 62.43 at the Interbank foreign exchange market.
However, it declined sharply by over 50 paise to touch the 63-mark against the greenback due to heavy capital outflows from the domestic equity markets which weighed on the currency market.
In addition, dollar demand from oil importers and banks weighed on the rupee.
“Crude price-led correction in the transport and communication segment will also start to reverse as the oil marketing companies adjust to relatively higher crude prices as also the likely depreciation pressures on the INR (rupee),” said a report by Kotak Institutional Equities.
The USD/INR pair is likely to remain range bound between 61.80 to 63.00 levels with a bullish bias, according to another report by India Forex Advisors.
The BSE-benchmark Sensex ended at 28,503.30, weaker by 427 points (1.48 per cent) over the previous close. NSE-based Nifty also declined by 128 points (1.46 per cent) to end at 8,647.75.
Call Rates drop and Bonds gain
The interbank call money rate, rate at which banks lend to each other to overcome overnight liquidity mismatches, ended weaker at 6.75 per cent from the previous close of 6.85 per cent. Intra-day, call money market moved in the range of 6.50 per cent and 7.70 per cent.
The 10-year benchmark government bond, maturing in 2024, jumped to Rs 103.94 from a close of Rs 104.44 on Thursday. The yield hardened to 7.79 per cent from 7.72 per cent. Bond prices and yields move in opposite directions.