Re gains on risk aversion ease

The rupee strengthened as gains in stocks and commodities prices damp risk aversion, spurring demand for emerging-market assets. The currency rose 0.3 per cent to 51.295 per dollar at close in Mumbai, the highest since February 27.

The currency has rebounded almost 2 per cent from an all-time low reached on March 3 as stock exchange data showed purchases of Indian equities by foreign funds exceeded sales last week for the first time in a month.

“Money is coming back into the markets worldwide as investors are turning slightly more optimistic about a global economic recovery,” said Sanjay Arya, Mumbai-based treasurer at state- owned Bank of Maharashtra. “The rupee could benefit as we see signs of an improvement in capital inflows.” The currency may reach 51.20 in the coming days, Arya said.

Overseas funds bought a net $26 million of Indian stocks last week, compared with net sales of $543 million in the previous five-day period, according to data released by the Securities and Exchange Board of India.

Bonds: Yields fall
The 10-year bonds rose for the third time in four days on speculation demand for government debt will increase on purchases by the central bank.

Yields on benchmark notes due 2019 declined as the Reserve Bank of India prepares to buy Rs 10,000 crore ($1.95 billion) of debt at an auction tomorrow. The monetary authority bought Rs 8,040 crore of bonds on March 16 as part of open-market operations aimed at capping yields.

The yield on the 6.05 per cent note due February 2019 slipped six basis points to 6.44 per cent at the 5:30 p.m. close in Mumbai, according to the central bank’s trading system. The price rose 0.43, or 43 paise per 100-rupee face amount, to 97.18. A basis point is 0.01 percentage point.

Call touches 4.70%
BS Reporter adds: Call rates touched a high of 4.70 per cent as against 4.55 per cent yesterday due to liquidity flowing out of the system to meet the advance tax payment requirement of companies.

According to data on the Clearing Corporation of India website, the weighted average rate for the day was 4.57 per cent compared with 4.33 per cent yesterday. In the collateralised borrowing and lending segment too, the weighted average rate was 4.03 per cent, as against 3.88 per cent yesterday.