Rupee drops 2 paise on $ demand

Written by Agencies | Mumbai | Updated: Apr 10 2013, 06:00am hrs
Snapping a two-session upmove, the rupee on Tuesday weakened by two paise to 54.58 against the dollar due to renewed demand for the US currency from importers and continued capital outflows amid weakness in local equities.

However, a sluggish dollar overseas capped rupee's fall to some extent, forex dealers said.

The local currency commenced the day's trade on a firm note at 54.49 against the dollar from Monday's close of 54.56 at the Interbank Foreign Exchange (Forex) market.

Later, it hovered in a volatile range of 54.41-54.65 before settling down at 54.56, a fall of two paise over its previous close.

Meanwhile, foreign institutional investors continued exiting Indian stocks and sold shares worth over $121.8 million (R664.90 crore) on Tuesday, according to provisional BSE data.

Bonds gain

Ten-year bond yield fell to a new three-week low while short-end swap rates hit their lowest in 20 months as a debt rally extended to a third session on rising hopes the central bank has room to cut interest rates next month.

The benchmark 10-year bond yield closed down 3 basis points at 7.88%, after touching 7.87%, a level last seen on March 19.