Rupee recovers on euro rebound, yields jump

The rupee recovered most of the lost ground on Tuesday aided by a rebound in euro and local stocks after the Swiss National Bank set a floor for the euro/Swiss exchange rate. Dollar sales from exporters also supported the local unit, traders said.

The rupee closed weaker at 46.11 per dollar against the previous close of 45.95 per dollar after rising to 45.95 per dollar in the day as the euro strengthened after the Swiss Central bank said the Swiss Franc could be pegged weaker.

This news led to heavy buying of the rupee, as the euro rose to 1.41/$ and Asian currencies followed cues, said dealers.

Yields on the 10-year benchmark bond closed higher at 8.30% from the previous day's close of 8.28%. Bond prices moved almost 25 paise intra-day.

According to dealers, yields fell after RBI governor D Subbarao said SLR might be cut in a phased manner, though markets reversed after deputy governor KC Chakrabarty clarified otherwise. Borrowing from RBI through the repo window was also lower at 5,090 crore.