High dependence on wholesale borrowing to put pressure on loan growth in coming quarters
Forex dealers said additional tightening measures announced by the RBI supported the local currency
At the Interbank Foreign Exchange Market, the rupee resumed strong at 59.50, which was the day's high. It later fell on dollar demand from importers, mainly oil refiners, to a low of 59.87
The note comes in the backdrop of intense speculation over the government and RBI opting to raise money from NRIs
It failed to maintain initial gains and was trading at 59.64 per dollar at 1050hrs
The rupee's decline is despite the RBI's liquidity-tightening steps announced last week
The recent set of RBI's money market measures was largely unanticipated and, hence, it resulted in extreme volatility in rates market
External sector, inflation remain key concerns
Increased demand for dollar from importers caused the decline
However, markets are now quite apprehensive and are likely to see profit booking on further rallies
The optimism stems from the reduced volatility in the market since the RBI intervention
Government has used NRI bond issue as a tool to stem rupee fall only on three occasions in the past-- in 1991, 1998 and then in 2001
Banking on adventure
According to dealers the rupee will trade in the range of Rs 59.00 to Rs 60.00 this week
Moody's Investors Services says the rupee fall will also raise the cost of servicing foreign currency debt for several firms
The rupee was also helped by fresh dollar sales by exporters and some banks and around Rs 250 crore capital inflows in stocks
Report says once the inflationary pressure abates and the rupee stabilises, the central bank's focus may shift towards promoting growth
Bonds fall ahead of government bond sale
The 8.33% G-sec maturing in 2026 rose to Rs 101.85 from Rs 101.17