Rupee opens higher; call rates jump to 10% RBI’s overnight move on borrowing pushes the rupee up to 59.405 per dollar from its previous close of 59.765 Mumbai: The Indian rupee on Wednesday opened higher against the dollar respoding to the overnight Reserve Bank of India’s (RBI’s) move to restrict the amount of money banks can borrow through the daily repo window. The partially convertible rupee opened at 59.405 per dollar compared with its previous close of 59.765. At 09.25am, the domestic currency was trading at 59.57 per dollar, up 0.33% from its previous close. Since January this year, the rupee has lost 7.68% and is the second biggest loser among Asian currencies after the Japanese yen. On Tuesday, RBI had cut the amount of money banks could borrow through its repo window to 0.5% of bank deposit from 1% earlier. It also said banks have to keep a daily average of 99% of their deposits as cash reserve ratio (CRR). CRR, currently at 4%, is the amount of deposits banks have to keep with RBI for no interest. Call money market rate jumped to 10% on Wednesday from 6.5% on Tuesday. The RBI measures are aimed at curtailing the rupee liquidity and preventing banks to borrow from RBI and buy dollars in the forex market. The central bank may have been forced to tighten liquidity after the interbank call money rate—the rate at which banks borrow short-term funds from each other—averaged 6.75% since 17 July, lower than the 6.85% average before the RBI moves. On Tuesday, call money rates touched a high of 7.35% in the interbank market before closing at 6.5%. However, the average yield on one-year commercial paper has already risen to 9.98% since 17 July from 8.82% between 1 and 15 July.
Posted on: Wed, 24 Jul 2013 07:00:38 +0000
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