The rupee on Tuesday recovered from near-53 levels but still ended down by 18 paise at 52.68/69 due to sustained dollar demand from banks despite firm domestic stock markets. At the Interbank Foreign Exchange (Forex) market, the rupee resumed lower at 52.66/67 per dollar against the last closing level of 52.50/51 per dollar.
The domestic currency fell further to the day’s low of 52.90 due to sustained dollar demand and weak equity markets. However, a recovery in stock markets and a weak dollar overseas helped the rupee to recoup the losses to some extent.
Bond yields hit 2-week highs
Benchmark bond yield ended flat after earlier hitting two-week highs on Tuesday because of concerns about waning interest from foreign investors in local debt and fears that the benchmark paper may see its last issuance this week. An auction of unutilised government and corporate debt limits attracted a poor response from foreign investors on Monday, signalling waning appetite for Indian debt from overseas buyers. A hefty amount of planned debt sales, a slowing economy, a falling rupee, and uncertainty about government reforms have contributed to net sales of 6.41 billion rupees of debt by foreign investors so far in the month as of April 20. The benchmark 8.79 per cent 2021 bond settled flat at 8.57 per cent after earlier hitting a two week high of 8.61 per cent.
Call money rates rise
Inter-bank call rate rose to 8.35/8.40 per cent from Monday’s close of 8.30/8.40, still above the new repo rate of eight per cent. Demand for funds from banks rose, as is typical in the first week of the two-week reporting cycle.