* Rupee ends at 60.47/48 per dlr vs 59.415/425 on Mon
* RBI keeps repo, cash reserve ratio unchanged
* Subbarao says RBI opposed to sovereign bond issuance
By Subhadip Sircar
MUMBAI, July 30 (Reuters) - The Indian rupee fell below the
key psychological level of 60 to the dollar to a three-week low
on Tuesday, posting its biggest fall in a month, as the central
bank kept interest rates on hold and failed to announce any
additional steps to defend the currency.
The rupee has now erased all gains since the Reserve Bank of
India first announced steps to defend the rupee by withdrawing
cash on July 15, and is within sight of a record low of 61.21
hit early this month.
Analysts said those actions alone were unlikely to prevent
more falls in the currency unless followed by additional steps
from the central bank or by measures from the government to
attract foreign inflows.
Instead, the central bank said on Tuesday it may withdraw
the cash tightening steps taken so far in a calibrated manner if
the rupee stabilises, comments that led investors to doubt the
RBI's resolve in sticking to its measures given surging bond
yields threaten to raise borrowing costs.
"It seems slightly strange for the RBI to tell the market
that it will unwind the liquidity tightening measures as and
when the currency has stabilised," said Robert
Prior-Wandesforde, economist at Credit Suisse, wrote in a note.
"After all, by indicating such an approach, it presumably
makes it less likely that stability will actually be achieved!"
The partially convertible rupee closed at 60.47/48
per dollar compared with 59.415/425 on Monday. It fell 1.8
percent to 60.55 in the session, its lowest since July 8.
It fell 1.8 percent during the session, its biggest single
day fall since June 26.
The rupee's woes were exacerbated by strong dollar demand by
state-run banks on behalf of oil refiners and from the
government, whose demand typically surges during month-end to
The government is contemplating measures of their own and
will announce steps in the next few weeks to curb the current
account deficit, chief economic adviser Raghuram Rajan said in
The current account deficit, which hit a record high of 4.8
percent of gross domestic product in the fiscal year ended in
March, is a key source of stress for the rupee.
However, RBI Governor Duvvuri Subbarao made it clear on
Tuesday he was opposed to a sovereign bond issuance, another
option that could bring foreign inflows, although it would risk
sending a signal of weakness to markets.
In the offshore non-deliverable forwards, the
one-month contract was at 61.03 while the three-month was at
In the currency futures market, the most-traded
near-month dollar/rupee contracts on the National Stock
Exchange, the MCX-SX and the United Stock Exchange all closed
around 60.91 with a total traded volume of $3.2 billion.
(Editing by Anand Basu)