The rupee declined by 79 paise to a near two-month low close of 63.26 against the US currency on persistent dollar demand from importers and a stronger greenback overseas. The domestic unit opened weaker at 63 to a dollar against last week’s closing of 62.47 at the Interbank Foreign Exchange (Forex) market. It plunged to 63.65 in afternoon trade on heavy dollar buying by oil companies. Persistent dollar demand from oil importers and banks, and a strengthening dollar, weighed on the rupee, a forex dealer said. Last week, Economic Affairs Secretary Arvind Mayaram had said state-run oil companies were sourcing 30-40 per cent of their dollar requirements through the open markets and not via the special window provided by RBI. The rupee moved in a range of 62.94 and 63.65 during the day. It, however, recovered to 63.26 after the RBI asked banks to sell dollars. Upasna Bhardwaj, Economist, ING Vysya Bank, said even as the Current Account Deficit concerns have abated and significantly lower capital flows are needed to finance the same, fears of early tapering by the Fed and withdrawal of temporary measures by the RBI in the subsequent weeks is expected to bring the rupee further under pressure. “We expect the rupee to trade in the 62-64 range in the near term, with a further shift towards 63-66 per dollar in the next quarter,” she said.
Call rates dip, bond yields soften
The overnight call money rates, the rate at which banks borrow from each other to meet short-term needs, ended a tad weaker at 8.75 per cent from Friday’s close of 8.80 per cent. Yield on the 10-year benchmark 7.16 per cent 2023 government bond softened to 8.95 per cent from its previous close of 8.99 per cent. It had hardened to 9.14 per cent in morning trade. The bond prices closed higher at Rs 88.66 from Rs 88.45 to a dollar.