Indian rupee recovers after hitting life-time low of 61.21 vs US dollar.

The Indian rupee opened stronger on Tuesday while bond yields dropped, following measures by the central bank and the market regulator to curb speculative trading in foreign exchange derivatives.

India's regulators toughened rules for derivatives trading in the currency market in a bid to arrest the steep decline of the rupee, which fell to a record low of 61.21 against the dollar on Monday.

The partially convertible rupee opened at 59.80 per dollar and is currently trading at 60.05/06 in choppy trade.

The benchmark 10-year bond yield dropped 7 basis points at open to 7.50 percent, while the most-traded 8.33 percent 2026 bond yield fell 6 bps to 7.68 percent.

The rupee fell to a record low while bond yields surged on Monday, exacerbating fears about the funding of the current account deficit and sending policy makers scrambling to find quick fix solutions beyond sporadic interventions.

The Reserve Bank of India was due to meet with officials from oil companies, the biggest buyers of dollars in domestic markets, to discuss their currency needs, two sources with direct knowledge of the matter said.

Dealers said the RBI, which intervened to defend the currency during the session, could mandate that refiners buy dollars via a separate window and not in currency markets, a measure that would help ease pressure on the rupee.

Meanwhile, Prime Minister Manmohan Singh will meet industry leaders on July 29 to discuss the rupee, while Finance Minister Palaniappan Chidambaram was due to travel to the United States from Monday in a previously scheduled trip to drum up foreign direct investment, especially in infrastructure.

Efforts to contain the rupee's slide highlight the vulnerability of a country dependent on capital inflows to fund a current account deficit that hit a record high of 4.8 percent in the fiscal year ended in March.

Source : indianexpress.com