The rupee was trading weak by 35 paise at 59.70 against the dollar at 11.22 a.m. local time.
The domestic unit shed 27 paise to 59.62 per dollar in the opening trade against the previous close of 59.35 against the dollar failing to sustain gains driven by the easing of FDI norms in various sectors and the RBI’s liquidity tightening measures.
In some of the sectors, where the Government has increased the FDI limit, investments might actually be hard to come by.
For instance, FDI in insurance has been raised from 26 per cent to 49 per cent. However, for this to take effect, Parliamentary nod is essential and the opposition from several elected representatives might put the spanner in the Government’s plan.
“The easing of FDI norms will not show any immediate effect so the rupee will continue to be under pressure due to weak macroeconomic fundamentals,’’ said the treasury head of a public sector bank.
Also, the woes of India’s high current account deficit and the need to finance it with foreign fund flows, is likely to exert downward pressure on the Indian unit.
Analysts have predicted the rupee to trade in the range of 59.30-60.20 during the week.
Call rates, G-Secs
The interbank call money rates, used by banks to borrow short-term funds from each other to tide over liquidity crisis, opened higher at 8 per cent from the previous close of 7.50 per cent.
The 7.16 benchmark government security, which matures in 2023, opened a tad higher at Rs 94.1 from the previous close of Rs 94. Yields softened a tad to 8.03 from the previous close of 8.05 per cent.
The widely traded 8.33 per cent government bond, maturing in 2026, fell a tad to Rs 101.05 from the previous close of Rs 101.18. Yields hardened a tad to 8.19 per cent from the previous close of 8.18 per cent.