The rupee was trading a tad strong at 62.09 per dollar against the previous close of 62.12 at 12.24 p.m. local time on mild dollar selling by banks and exporters.
The domestic unit opened a tad weak at 62.15 on the prospects of a rate hike by the Reserve Bank of India. Also, increased demand for dollar from importers and weak domestic equity market dampened the rupee sentiment in early trade.
According to the data released last week, the country’s factory output contracted for the first time in four months in October and retail inflation rose to its highest since January 2012. This is likely to drive RBI to maintain its hawkish stance on key interest rates in its monetary policy due on December 18.
A higher interest rate is likely to impact the growth in credit demand. October industrial production declined 1.8 per cent year-on-year and November CPI (consumer price index) inflation jumped to 11.24 per cent.
RBI Governor Raghuram Rajan maintained that the central bank is not comfortable with the current level of inflation and would carefully calibrate its monetary policy.
Call rates, G-Secs
The inter-bank call money rate, the rate at which banks borrow from each other to meet their short-term requirements, opened higher at 8.25 per cent from Friday’s close of 8 per cent.
The 10-year benchmark 7.16 per cent government security (G-secs), which matures in 2023, opened weak at Rs 86.96 from Rs 86.99. Yield on the security hardened to 9.26 from the previous close of 9.25 per cent.
The widely traded 8.83 per cent G-Sec, which also matures in 2023, opened higher at 8.92 per cent from 8.91 per cent.
