After dropping to a further historic low of 68.75 against the dollar, the rupee recovered to 68.17 at 4.00 p.m. local time on mild dollar selling by banks and exporters.
The domestic unit breached a new low of 67.06 in the opening trade, down 82 paise from Tuesday’s close of 66.24 per dollar.
It further slipped to hit a new historic low of 68.75 against the dollar in the early trade on heavy month-end demand for dollar from banks and oil importers amid a sharp fall in the domestic equity market.
After declining over 500 points in the early trade, the BSE benchmark Sensex ended the session up 28.07 points (0.16 per cent) at 17,996.15.
Fiscal deficit woes
Parliament approval for Rs 1.35-lakh-crore Food Security Bill spooked the markets on Tuesday on fears of worsening fiscal deficit woes.
The Indian rupee is among the worst performing currencies among the emerging market currencies this year falling about 17 per cent.
The RBI intervention is not helping the rupee at this point. A massive intervention is needed to limit further depreciation, though this could be at the cost of heavy outflow of forex reserves in the short-term, the dealer added.
Call rates, G-Secs
The 10-year benchmark 7.16 per cent government security (G-Sec), which matures in 2023, was trading at Rs 89.00 from the previous close of Rs 89.50. Yields on the security jumped to 8.86 per cent from the previous close of 8.78 per cent.
Last week, the yields had recovered from its five-year high of 9.5 per cent after the RBI provided relief to the banks by reversing some measures to limit the losses on their G-Sec investments.
The inter-bank call money rate, the rate at which banks borrow from each other for short-term funding, was trading higher at 10.25 per cent from Tuesday’s close of 10.15 per cent.
