|Chennai||Rs. 27770.00 (-0.14%)|
|Mumbai||Rs. 29200.00 (2.31%)|
|Delhi||Rs. 27900.00 (-0.36%)|
|Kolkata||Rs. 28270.00 (1%)|
|Kerala||Rs. 27050.00 (-0.37%)|
|Bangalore||Rs. 27550.00 (1.66%)|
|Hyderabad||Rs. 27770.00 (-0.14%)|
This had to happen sooner or later. The rupee nearing the 60 mark against the dollar was an event waiting to happen. There is nothing positive in the economy, apart from lip service from the government, that merited the rupee to hold at the 52-55 range. What triggered the slide this time around was the strengthening dollar on the back of rising interest rates in the US.
Interest rates in the US started rising after Ben Bernanke, chairman of the Federal Reserve, hinted that there can be a slowdown in bond buying after a strong set of economic numbers were reported. As US bonds crossed the 2 per cent mark, Indian bonds were touching new lows. Bond yield on the 10-year 7.16 per cent benchmark paper traded below 7.14 per cent. With hedging costs over 6.5 per cent (and rising on account of renewed volatility), there was little reason for arbitrage in bond markets, which led to a reversal of dollar flow from Indian bond markets. Analysts are now expecting over $1.5-2 billion of bond sales. The government's plan of reducing the withholding tax on bonds proved of little help under these conditions.