The rupee fell to its lowest in the week to close at 62.93 against the dollar on Thursday, on concern that the US Fed may taper its bond buying programme earlier that
expected.The minutes of the Federal Reserve’s October 29-30 meeting reignited fears that the tapering of the $85-billion monthly bond buying programme is possible in the coming months if the US economy improves as anticipated.
This triggered fears of dollar outflows from the emerging markets, including in India. Meanwhile, the BSE-benchmark Sensex plunged 406 points (1.97 per cent) to end weaker at 20,229 points. This also put pressure on the rupee.
The domestic unit opened 27 paise weaker at 62.85 against the previous close of 62.58 a dollar. According to Fitch Ratings, the spillover effects of a weaker rupee have not significantly hurt India’s creditworthiness, and hence would not trigger any rating action as this point.
Call rates, G-Secs
The overnight call money rate, the rate at which banks borrow short-term funds from each other, ended a tad lower at 8.70 per cent from Wednesday’s close of 8.73 per cent. The price of the widely traded 8.28 per cent security, maturing in 2027, closed weaker at Rs 93.83 from Rs 94.15. The yield hardened to 9.06 per cent from 9.02 per cent. Similarly, the yield on the 10-year benchmark government security, 7.16 per cent maturing in 2023, hardened to 9.07 per cent from 9.02 per cent. The Finance Ministry said on Tuesday that a further action by the RBI could moderate the yields on the bonds.