Thursday, 15 August 2013

Rupee hits 62/$; bonds fall after latest RBI measures

Government bonds fell following the latest round of measures from the central bank to prop up the currency.


Rupee extended losses on Friday to touch a record low of 62 per dollar, down nearly 60 paise from its Wednesday's closing value of 61.43.

Sameer Goel, head of Asia Rates & Currency Research, Deutsche Bank believes the government’s focus to contain the current account deficit is a healthier approach though its timing may be mismatched. He believes the rupee will continue to be under pressure, but that is unlikely to be the key focus point now.

Government bonds fell following the latest round of measures from the central bank to prop up the currency.

The Reserve Bank of India (RBI) imposed restrictions on foreign exchange outflows and goldimports on Wednesday in a new attempt to defend the rupee, as a spike in inflation added pressure on policymakers to curb a crippling external deficit.

The partially convertible rupee was trading at 61.33/34 per dollar at 0905 India time (0335 GMT), slightly stronger from its Wednesday's close of 61.43/44. Financial markets were closed on Thursday for a national holiday.

The benchmark 10-year bond yield was up 3 basis points at 8.53 percent from its previous close.

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