MUMBAI: The bond and equity markets paid a heavy price for Reserve Bank of India's sledgehammer measures to control the rupee. However, despite the intensity of the measures, the rupee appreciated by only 58 paise to close at 59.32 as importers took advantage of the rupee appreciation to cover their positions.
Bank's scrambled to borrow Rs 2.2 lakh crore from RBI before the cap on borrowing sets in on Wednesday and an attempt by ten state governments to raise Rs 8,600 crore through bonds flopped with collective subscription amounting to only Rs 2,210 crore.
In the bond markets, banks and bond houses booked heavy losses as prices of government securities dropped sharply as there was a rush to sell bonds. The yield on the benchmark 10-year bond shot up 52 bps to 8.05%.
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