The rupee softened by 3 paise to close at 52.98/99 against the US dollar on Thursday after two days of gains, in line with a minor fall in local equities.
Mild dollar demand from importers amid dollar firmness of in overseas markets ? with the American currency being quoted at nearly a 16-month high against the euro ? also weighed on the rupee?s fortunes.
However, increased capital inflows amid some dollar-selling by exporters on hopes of RBI intervention restricted the rupee?s fall.
At the Interbank Foreign Exchange, the local unit resumed lower at 53.04/05 per dollar, as against Wednesday?s close of 52.95/52.96 per dollar, and fell immediately to a low of 53.10 per dollar on initial weakness in the stock market and dollar demand from importers.
10-year bonds gained, pushing yields to the lowest level in two weeks, on speculation the central bank will cut interest rates to support a slowing economy.
The nation?s monetary-policy cycle has ?peaked,? Reserve Bank of India deputy governor Subir Gokarn said at a conference in Singapore on Thursday. The bank boosted interest rates 13 times in the last two years to curb inflation. Food-price index fell for the first time in at least 5 1/2 years after prices of onions, potatoes and wheat declined. India?s factory output shrank 5.1% in October from a year earlier, government data showed last month.
?Investors are bullish on bonds as more and more people are getting convinced about the possibility of a rate cut,? said Paresh Nayar, head, money-market and currency trading at FirstRand.
