Rupee nears 92/$, RBI helps cap fall

Mumbai: The rupee ended Thursday at 91.96 to the dollar, down 18 paise from its previous close of 91.78, after slipping to a record low near the 92 level before recovering marginally on dollar sales by public sector banks on behalf of RBI. The dollar index edged up about 0.12% to around 96.27, adding to pressure on the local currency amid strong dollar demand linked to derivative maturities and corporate hedging.Traders said RBI intervention in the foreign exchange market helped cap losses beyond the psychologically important 92 mark. However, the rupee’s weakness spilled over into the govt bond market, where RBI had undertaken measures to infuse liquidity to keep yields down. However, dollar sales by RBI ended up draining some of the liquidity. Expectations of further depreciation also weighed on the interest rate swap market, pushing short-term swap rates higher despite relatively benign domestic macro indicators.According to Jateen Trivedi of LKP Securities, rupee traded flat to weak as markets remained cautious ahead of the Union Budget on Feb 1. He said elevated bullion prices increased the import bill, and continued FII selling in equities has added pressure.