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Month end dollar demand and absence of positive economic indicators dragged the rupee to a one month low as the Indian unit closed at 60.77 against the dollar.
The rupee opened lower at 60.67 (previous close 60.60) and then moved between 60.61 and 60.89 in intraday trade.
Analysts believe that the Indian currency is likely to trade in the 60-61 zone over the next two weeks.
A slowdown in foreign inflows into the Indian markets is also the reason for the rupee’s fall.
Abhishek Goenka, Founder & CEO, India Forex Advisors said, “The sluggish pace of FII flows is seen eating away the gains in the domestic currency. The pace of FII flows in the Indian markets has dramatically reduced. From the humungous inflows of $5.17bn in the previous month, the Indian markets have been able to get only $1.31bn this month till now with the month end inching nearer.”
Call rates, G-Sec
The overnight call money rate (the rate at which banks borrow money from each other to overcome short-term liquidity mismatches) closed sharply lower at 8 per cent against the previous close of 9.20 per cent.
The yield on 10-year benchmark 8.83 per cent bond, maturing in 2023, closed almost flat at 8.85 per cent (previous close of 8.86 per cent). Prices rose to `99.83 from `99.78. Bond yields and prices move in opposite direction.
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