The rupee fell to its lowest level in more than a month on speculation that foreign funds would cut purchases of local assets, as oil prices hover near the highest level since May, according to Bloomberg.
The currency declined for a third day after foreign investors slowed net buying of local equities to $56 million on March 1. Crude prices have advanced 7.5 per cent this year, reaching a 10-month high of $110.55 a barrel in New York on March 1. India imports almost 70 per cent of its energy needs.
The rupee fell 0.7 per cent to 49.85 per dollar at close in Mumbai, according to data compiled by Bloomberg. It touched 49.95, the lowest level since January 25. The currency may drop to 50 per dollar this week, Raghuvanshi said.
Bond yields near 3-week high
10-year bond yields neared a three-week high on speculation that investors would refrain from adding to their holdings as payment of tax by companies this month may worsen a cash shortage.
Lenders borrowed an average of Rs 1.4 lakh crore a day from the Reserve Bank of India in February, more than double the amount preferred by the monetary authority. The yield on the 8.79 per cent notes due in November 2021 was little changed at 8.23 per cent in Mumbai, according to the central bank’s trading system. The rate touched 8.24 per cent on March 1, the highest level since February 9. The monetary authority cut the amount of deposits lenders must set aside as reserves to 5.5 per cent from six per cent on January 24.
