Rupee weakens, expected to breach 56 today

It had opened at Rs 55.68 and during intra-day trades it touched a high of Rs 56.00 and a low of Rs 55.64

The rupee weakened further on Tuesday, ending at Rs 55.97 against the dollar, compared with the previous close of Rs 55.58.

It had opened at Rs 55.68 and during intra-day trade, touched a high of Rs 56.00 and a low of Rs 55.64. “The weakness was due to month-end dollar demand from oil importers and defence-related dollar purchases,” said Sandeep Gonsalves, forex consultant and dealer, Mecklai & Mecklai.

The rupee came within striking distance of a nine-month low, though exporters helped prevent a bigger slide by selling the greenback. The currency has fallen heavily in May, despite huge foreign inflows into stocks and debt, amidst a global rally in the dollar. Foreign institutional investors pulled out $36.8 million from domestic markets on Tuesday, compared with $57.8 mn yesterday.

Bonds turn bearish
The 8.33 per cent government security maturing in 2026 moved down to Rs 108.28 from Rs 108.33 yesterday, while its yield held stable at 7.33 per cent. The 8.20 per cent government security maturing in 2025 edged down to Rs 106.98 from Rs 106.99, while its yield ruled steady at 7.33 per cent.

Call rates end lower
Government securities (G-Sec) traded bearish on selling pressure from banks and companies. Call money rates ended lower at the overnight call money market here on Tuesday due to lack of demand from borrowing banks.