While the US dollar continued to steam ahead, buoyed by jitters over Europe's debt crisis, sustained capital inflows worth $50 million from FIIs restricted the rupee's fall to some extent, said forex dealers. At the Interbank Foreign Exchange (Forex) market, the domestic currency resumed sharply lower at 54.55 a dollar from overnight close of 54.20. It immediately dropped further to a low of 54.67 on heavy dollar demand from importers and early steep fall in local stocks.
Later, rupee recovered on smart rebound in domestic stock market to a touch a high of 54.31 before finishing at 54.36 still showing a fall of 16 paise or 0.30%. In last two days, rupee had surged by 41 paise or 0.75%. "The rupee's fall can be attributed to weak global markets and the steep fall in Euro against the dollar," said Ashtosh Raina, Head - Forex Trading, HDFC Bank.
The euro remained under pressure, falling to over $1.27, its lowest intraday level since September 7, but was eased a tad higher after reports said the Greek parliament passed $17 billion package of extra austerity measures.
Bonds flat in thin volume
Bond yields ended flat on Thursday in choppy trading, with the market likely to remain rangebound ahead of a holiday-shortened week peppered with key macroeconomic data.
The benchmark 10-year bond yield flat at 8.19%, after trading in an 8.18-8.19% range during the day. Trading volumes were at 129.3 billion rupees ($2.39 billion), half that of a usual session, and are likely to remain thin in the coming week given that it will be cut short to three trading sessions due to public holidays.