The rupee ended mildly weaker at 59.35 against the dollar as the Indian unit could not withstand early gains, a day after the government relaxed the foreign direct investment (FDI) norms in several sectors.
The Indian unit opened stronger at 59.14 and then touched a high of 59.10 in intra-day trade.
In some of the sectors, where the government has announced FDI, investments might actually be hard to come by. For instance, FDI in insurance has been raised from 26 per cent to 49 per cent. However, for this to take effect, Parliamentary nod is essential and the opposition to higher foreign stake in insurance from several elected representatives might put spanner in the government’s plan.
Also the woes of India’s high current account deficit and the need to finance it with foreign fund flows, is likely to exert downward pressure on the Indian unit.
Analysts have predicted the rupee will trade in the 59.30 to 60.20 during the course of the week.
Call rates rise, G-Sec steady
The interbank call money rates, used by banks to borrow short-term funds from each other to tide over liquidity crisis, closed higher at 7.50 per cent from previous close of 6.30 per cent. A higher call rate is an indicator of more liquidity demand by banks.
During the day, the call rate swung between a high of 9.25 per cent and a low of 6.25 per cent.
The 7.16 benchmark government security, which matures in 2023, closed a tad higher at Rs 94 from previous close of Rs 93.90. Yields softened a tad to 8.05 per cent from previous close of 8.10 per cent.
The widely traded 8.33 per cent government bond, maturing in 2026, fell a tad to Rs 101.18 from previous close of Rs 101.20. Yields were almost steady at Rs 8.18 per cent.
satyanarayan.iyer@thehindu.co.in
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