The rupee dropped, erasing a monthly gain, after the central bank kept interest rates unchanged and raised its inflation estimate.
The currency declined 0.1 per cent to 55.66 per dollar in Mumbai, according to data compiled by Bloomberg. This compares with 55.64 at the end of June. One-month implied volatility, a measure of exchange-rate swings used to price options, was unchanged at 11.20 per cent on Tuesday, having fallen 45 basis points, or a 0.45 percentage point, this month.
The Reserve Bank of India kept the benchmark repurchase rate at eight per cent, according to a statement in Mumbai on Tuesday.
Bonds ends weak
Government bonds dropped on heavy selling pressure from banks and companies. The 8.15 per cent government security maturing in 2022 dipped to Rs 99.35 from 100, while its yield surged to 8.25 per cent from 8.15 per cent. The 9.15 per cent government security maturing in 2024 fell to Rs 105.55 from 106.24, while its yield climbed 8.41 per cent from 8.33 per cent.
Call rates steady
The call money rate finished stable at 8.05 per cent. It moved in a range of 8.15 per cent and 8.00 per cent.