As the euro zone crisis unfolded, investors rushed for safe-haven US treasury assets in the June quarter, leading to an unprecedented dollar rally against all major currencies. This, coupled with domestic economic weaknesses, resulted in a rapid slide in the rupee, which touched an all-time low of 57.30 against the dollar on 22 June. The other highlight of the quarter was a steady drop in global crude prices. Liquidity continued to be tight, but bond yields dropped even though commercial banks declined to cut loan rates.
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