Rupee slides further to 49.65 against dollar

MONEY MARKET ROUND-UP

Rupee ended down against the dollar today as banks persistently bought the greenback for some importers and for foreign funds, noting the decline in local share indices, dealers said.

The large private oil company is said to have sold around $80 million at Rs 49.80 a dollar, while the large engineering company is said to have sold around $100 million at Rs 49.60-49.65 a dollar today, dealers said. The Indian unit ended at Rs 49.65 a dollar today compared with Rs 49.37 a dollar on Monday. Rupee touched an intraday low of Rs 49.80 per $1 today.

Currency dealers said a large private petrochemical oil company is estimated to have bought around $200 million at Rs 49.50-49.80 per $1 today.

The government bond prices ended up today as expectations that the Reserve Bank of India (RBI) would cut interest rates outweighed concerns over more supply from gilt auctions this week and the likelihood of government overshooting its borrowing target this year, dealers said.

The most traded 8.24 per cent, 2018 gilt settled at Rs 105.22 or 7.4576 per cent yield-to-maturity, compared with Rs 104.86 or 7.51 per cent on Monday. Expectations of interest rate cut were further strengthened after the finance minister said liquidity would be ensured at an adequate price.

“Sooner or later, RBI is expected to cut interest rates. If it cuts reverse repo rate by 50 bps, then we may see 10-year paper yield falling to 7.25 per cent,” said Anup Verma, associate vice-president, money markets, Development Credit Bank.