Re advances on dollar sale speculation

The rupee strengthened, after fluctuating through the day, on speculation exporters sold dollars to benefit from the best exchange rate in more than five weeks.

The rupee rose 0.2 per cent to 53.9 per dollar in Mumbai, according to data compiled by Bloomberg. The currency touched 54.2 earlier, the weakest since September 21. One-month implied volatility, a gauge of exchange-rate swings used to price options, rose 10 basis points, or 0.10 percentage point, to 10.20 per cent.

The currency had earlier dropped as the central bank maintained its key policy rate to fight price pressures, while lowering lenders’ reserve requirements to revive growth.

Bonds remain weak
Government bonds remained weak on sustained selling from banks and corporates. The 8.15 per cent government security maturing in 2022 dropped to Rs 99.8 from Rs 100.09 previously, while its yield spurted to 8.2 per cent from 8.2 per cent.

The 8.33 per cent government security maturing in 2026 fell to Rs 100.5 from Rs 100.8, while its yield rose to 8.26 per cent from 8.23 per cent.

Call rates recover
Call rates recovered at the overnight call money market here on Tuesday on fresh demand from borrowing banks. The call money rate finished higher at 8.05 per cent from 8.00 per cent yesterday. It moved in a range of 8.10 per cent and 7.90 per cent.