Rupee rebounds to one-month high vs dollar

The currency on Wednesday bounced back sharply by 63 paise to close at 59.13 against dollar

Boosted by the the Reserve Bank of India (RBI)'s fresh steps to curb exchange rate volatility, the rupee on Wednesday bounced back sharply by 63 paise to close at a one-month high of 59.13 against the dollar. Snapping a two-day fall, the rupee opened strong at 59.49 a dollar from the previous close of 59.76 at the Interbank Foreign Exchange Market and then touched a low of 59.59.

Later, it rebounded to a high of 59.01 before closing at 59.13, a rise of 63 paise or 1.05 per cent. RBI on Tuesday announced more measures to squeeze liquidity from the banking system. It limited access to borrowed funds by reducing the liquidity adjustment facility for each bank from to 0.5 per cent of net demand and time liabilities from one per cent. RBI also asked banks to maintain a higher average cash reserve ratio of 99 per cent of the requirement daily, as against 70 per cent earlier.

Bonds remain bearish
Government securities (G-sec) closed bearish on sustained selling pressure from banks and corporates. The 7.16 per cent G-sec maturing in 2023 dropped to Rs 91.65 from Rs 93.22 on Tuesday, while its yield climbed to 8.60 per cent from 8.35 per cent. The 8.07 per cent G-sec maturing in 2017 fell to Rs 97.34 from Rs 98.30, while its yield shot up to 8.88 per cent from 8.58 per cent.

Call rates recover
Call money rates ended higher on Wednesday due to good demand from borrowing banks. The rates finished higher at seven per cent from the 6.50 per cent of Tuesday.

It moved in a wide range of 10.15 per cent and seven per cent.