The rupee pared gains against the dollar on Tuesday and closed at Rs 45.07/$1 compared with 44.97 previous close, which was a new 18 months high. The rupee after opening at Rs 44.95/$1 hit a fresh 18 month intra-day high as some state-owned banks, exporters and oil companies were seen buying dollar lured by attractive level, dealers said.
The yield on the 6.35 % note due January 2020 rose three basis points to 7.79% at Tuesday?s close. The price fell 0.17, or 17 paise per 100 rupee face amount, to 90.30. The rupee hit a high of Rs 44.88 and low of 45.14 against the greenback on Tuesday. However, earlier in the day some custodian foreign banks were selling the dollar.
?The appreciating rupee drove exporters cancelling their one-year forward contract and thereby booking profits. Further, some importers including oil companies were buying dollar to meet their month-end commitment,? said Sudarshana Bhat, chief forex dealer at Corporation Bank. According to the dealers, oil companies including BPCL, HPCL and IOC were buying dollars.
Overseas investors, who booked profits Tuesday in local stocks after a steep rally, were buying dollars to support their outward remittances, dealers said.
India?s 10-year bonds declined, pushing yields higher from a seven-week low, on concern accelerating inflation and the prospect of further increases in interest rates may cap demand for Indian debt.The Reserve Bank of India lifted its benchmark borrowing rate by 0.25 percentage point to 3.5% on March 19, the first increase since 2008. Wholesale-price gains quickened to 9.89%, the most in 16 months, in February.
?More action by the central bank is certain as inflation is quickening,? said S. Srikumar, a fixed-income trader at state-owned Corporation Bank in Mumbai.