The rupee gave up some early gains by the end of the trade on Monday and settled 7 paisa lower at 83.22 per US dollar, against Rs 83.29 on Friday, due to equity outflows, dealers said.
The rupee opened 14 paisa stronger against the greenback due to a fall in the Dollar Index after lower than expected US nonfarm payroll data, which came in at 150,000 against the expectation of 180,000. Additionally, the US Unemployment Rate came in higher than expected at 3.9 per cent, as against the expected 3.8 per cent.
“After the jobs data, the Dollar Index was down, so the rupee opened higher,” a dealer at a state-owned bank said. “Later, foreign banks were buying (dollars), there was some equity outflow, that is why it (rupee) depreciated,” he added.
Market participants speculated that the Reserve Bank of India (RBI) intervened in the foreign exchange market to protect the rupee from weakening further.
“The RBI was there at around 83.24 per dollar level,” a dealer at another state-owned bank said. “The nationalised banks sold dollars on behalf of them,” he added.
The yield on the benchmark 10-year US Treasury bond fell after the favourable data on Friday, which in turn weighed on the domestic government bond yields in the early trade. However, traders refrained from placing large bets due to continued uncertainty around the Open Market Operation (OMO) auction by the RBI, dealers said.
The yield on the benchmark 10-year government bond settled flat at 7.31 per cent against Friday.
“The positivity is being faded by the speculations around OMO,” a dealer at a primary dealership said. “People are not comfortable to buy at 7.29-7.30 levels, until there is clarity around the auction,” he added.
Some traders sold bonds at a profit, which further aided yields, dealers said. “Those who bought at around 7.34-7.35 per cent level, they sold today (Monday),” a dealer at a primary dealership said.
RBI Governor Shaktikanta Das had said in his monetary policy statement that the central bank may conduct open market operations to mop up liquidity.
The central bank had not given any timeline for OMO sales and said it will depend on the ongoing liquidity situation.
The banking system liquidity eased back to surplus mode on Friday on the back of government spending and the maturity of government bonds. Banks parked Rs 37,975 crore with the RBI on Sunday, followed by Rs 13,521 crore, and Rs 31,871 crore on Friday and Saturday, respectively.
Government bonds of around Rs 1.4 trillion are scheduled to mature in November, out of which Rs 53,925 crore worth of bonds matured in the first week of November.