Rupee plunges, closes above 44

MONEY MARKET ROUND-UP

The rupee depreciated further today to close above the psychological level of 44 against the dollar, the lowest since March 15, 2007. The rupee turned weak on demand for the greenback from oil companies and speculation that foreign investors may reduce their holding in Indian equities further due to a weak market.

The rupee fell 0.5 per cent to 44.16 against the dollar at the close of trading hours. Oil companies have stepped up their purchases after global crude oil prices surged in Asian trade.

Forex dealers said a sharp recovery in the dollar against other global currencies also weighed on the rupee. The dollar supply is inadequate as there has been a sustained demand for the US currency amid gains in the overseas market, they added.

The rupee is probably bearing the consequences and will remain weak in the near term.’’ The rupee may trade in a range of 44.05-44.25.

Call rate: Firm near 9%

Call money rate ended firm around Reserve Bank of India’s repo rate of 9 per cent today on strong demand and as cash supply came under pressure after the 25 basis points hike in cash reserve ratio took effect on Saturday. The one-day call rate ended at 9.00-9.10 per cent compared with Saturday’s close of 9.25-9.30 per cent for two-day loans.

Gilts up on SLR demand

Government bond prices rose 59 paise today as banks bought to cover their statutory liquidity ratio needs, dealers said. The 10-year benchmark 8.24 per cent, 2018 paper ended the day at Rs 97.5450 or 8.6174 per cent yield-to-maturity as against Friday’s closing of Rs 96.95 or 8.7112 per cent yield. Banks have to keep 25 per cent of their net demand and time liabilities in form of government securities.