Rupee near 2-month low

The rupee fell, approaching a two-month low, as US consumer confidence nearing a one-year high bolstered demand for dollars amid a retreat in local equities.

The rupee declined 0.1 per cent to 50.8 per dollar in Mumbai, according to data compiled by Bloomberg. The currency fell 3.5 per cent this month, paring its quarterly advance to 4.5 per cent. Earlier, it touched 51 per dollar, approaching 51.5 reached on March 26, the weakest level since January 16.

The currency headed for its first monthly decline this year as the Bombay Stock Exchange benchmark index Sensex fell 0.8 per cent. Foreign investors cut holdings of Indian stocks by $18.4 million on March 26, exchange data show. The Reserve Bank of India kept borrowing costs unchanged on March 15 citing inflation risks and the next day Finance Minister Pranab Mukherjee said India’s fiscal deficit will be 5.9 per cent of gross domestic product in the year through March 31. “After the RBI policy review and Budget, there seems to be nothing going for the Indian economy and this is hurting the rupee,” said J Moses Harding, an executive vice president at IndusInd Bank Ltd in Mumbai. “The US economy seems to be regaining strength and the Dow Jones index is moving towards pre-Lehman levels, while the Sensex is moving away.”

Call rate recovers on fresh demand
The overnight call money rate closed strong at 9.4 per cent from yesterday’s closing level of 8.5 per cent, on to fresh demand from borrowing banks amid scarcity of liquidity in the banking system. It moved in a range of 9.6 per cent and 8.8 per cent. RBI under the Liquidity Adjustment Facility purchased securities worth Rs 1,63,875 crore from 68 bids at the one-day repo auction at a fixed rate of 8.50 per cent.