After breaching the 56 levels to near-nine month low, the rupee recovered to close 10 paise weaker at 55.59 against the dollar due to dollar selling by exporters.
The Indian unit opened weaker at 55.80 on Thursday after closing at 55.49 due to persistent demand for the American currency and global weakness in equity markets.
Intra-day, the unit fell to a near nine-month low of 56.02 per dollar after the BSE-benchmark Sensex plunged by 388 points (1.93 per cent) to end at 19,674 points.
Sustained gains in the American currency against the world’s major currencies amid concerns about a potential pullback in the US monetary stimulus programme shifted investors towards the dollar, being the safer currency.
“The market felt the inflow of $85 billion that it was enjoying every month would evaporate after the US central bank chief hinted at scaling down the quantitative easing programme. This triggered a massive fall in global currencies,” said a dealer with a public sector bank.
However, exporters sold dollars around after the rupee touched the 56-mark and appreciated to 55.54 per dollar during the day.
Further, rising gold and oil imports will raise concerns of widening trade deficit mothballing to higher current account deficit.
Call rates and G-Secs
The interbank call money rates ended slightly lower at 7.25 per cent from 7.30 per cent. It moved in a narrow range of 7.15 to 7.35 per cent.
The 8.15 per cent government security (G-Sec), which matures in 2022, closed at Rs 105 from the previous close of Rs 105.10. Yields increased to 7.38 per cent from 7.36 per cent.