Slowdown in inflows also weighed on rupee that ended 22 paise lower ahead of the release of the minutes of a key US Federal Reserve meeting.
The future liquidity management by Reserve Bank of India (RBI) will be mainly through forex forward interventions, the global financial services provider added.
Corporate bond yields have fallen sharply, making it 55 bps cheaper for companies to issue bonds than a couple of months ago. This is working in RBI's favour.
Money markets are crucial in the country because banks rely on overnight funding to finance longer-term borrowing - a reliance that has often made the market volatile.
Heavy dollar demand from importers and weakness in local equities also pulled the rupee down against the Greenback.
Traders expect the rupee to remain range-bound in the near-term, with markets also focused on Federal Reserve Chair Janet Yellen's congressional testimony due later on Tuesday.
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