The Indian rupee and government bonds slipped on Tuesday in thin trade as state-run banks, key players in both markets, were shut by a one-day nation-wide strike by bank employees protesting against banking sector reforms. Some one million bank workers went on strike to protest against government plans to encourage bank mergers, shut unviable branches and ease foreign direct investment rules, measures the workers fear will result in job losses.
Dealers in the $9 billion-a-day foreign exchange market said trading volumes were about half the daily average, with foreign banks and private banks fairly active. Some stray deals were also done by state-run banks, a currency broker said.
The rupee ended at a two-week low of 43.7200/7300 for the second straight day, a tad weaker than Monday's close at 43.7225/7275 as the dollar clung to its broad gains ahead of an expected quarter percentage point increase in US rates.
The yield on the benchmark 10-year bond rose to 6.7149 percent, from the previous day's close at 6.7064 percent as fears linger that high oil prices would rekindle inflationary pressures in Asia's fourth-biggest economy.
Corporate bond yields edged up with sentiment cautious ahead of the US Federal Reserve's policy meeting later in the day.