Rupee ends weak, yields snap 4-day decline

The rupee ended a touch weaker on Wednesday, despite domestic shares hitting record highs, as caution prevailed ahead of the release of minutes from the US Federal Reserve's March meeting.

Foreign investors have been active buyers of debt and equities since March, and net purchases in April alone have already totalled $ 933.67 million, according to the market regulator's data.

The rupee ended at Rs 60.14 a dollar compared with previous close of Rs 60.13 on Monday. The market was closed for Ram Navami on Tuesday. The rupee had touched an eight-month high of 59.59 on April 2, before giving up some gains, with the Reserve Bank of India (RBI) also suspected of having bought dollars to replenish its foreign exchange reserves.

The rupee strengthened the most this month on the optimism that Asia's relatively fast economic growth will attract capital inflows.

"The market expectation broadly is that the Federal Open Market Committee minutes will be less hawkish than the press conference in March," said Nizam Idris, a strategist with Macquarie Capital in Singapore. Meanwhile, government bond snapped a four-day decline on speculation a rally in yields to the highest level since November attracted investors. The yield on the 10-year benchmark government bond (8.83 per cent, 2023) ended at 9.03 per cent compared with previous close of 9.10 per cent.

Overnight rates fell due to government spending. In the interbank money market, the weighted average call money rate stood at 8.24 per cent on Wednesday compared with 8.52 per cent on Monday.