The rupee plummeted by over 50 paise to close at 55.93 against the dollar as the Reserve Bank of India held tight on policy rates.
The rupee rallied as much as 71 paise through the day. It touched a low of 56.05.
The domestic unit had opened slightly higher at 55.34 compared with Friday’s close (55.39) on hopes of a 25 basis points rate cut in policy rates.
The RBI had said earlier that it will cut rates if inflation mellows. Inflation data released on June 14 indicated that the Wholesale Price Index-based inflation in May rose to 7.55 per cent from 7.23 per cent in April.
“While growth in 2011-12 has moderated significantly, headline inflation remains above the levels consistent with sustainable growth. Importantly, retail inflation is also on an uptrend,” a RBI statement said.
The rupee and the markets rallied in the positive zone in early trade as Greece elections, which were held on Sunday, paved the way for a government that will support the international bailout and stick to unpopular austerity measures.
Call rates, G-secs drop
The inter bank call rates closed at 8.15 per cent. In intra-day trade the rates touched a high of 8.40 per cent.
The 8.79 per cent 10-year benchmark government security, which matures in 2021, closed Rs 102.30 (yield: 8.41 per cent). It had opened at Rs 102.97. Bond rates and yields move in opposite direction.