Re snaps 2-session losing string

The rupee snapped its two-session losing string and recovered by 25 paise to close at 52.71 against the dollar on Monday, owing to fresh dollar selling by exporters and a smart rally in local equities.

A weak dollar abroad, amid renewed capital inflows, too, aided the rupee sentiment, a dealer said.

At the interbank foreign exchange market, the domestic unit opened higher at 52.85/86 a dollar, compared with last weekend's close of 52.96/97. Later, it moved in a range of 52.93 and 52.67 before settling the day at 52.71/72, a rise of 0.47 per cent. In last two sessions, it had fallen by 46 paise, or 0.88 per cent.

The Bombay Stock Exchange benchmark Sensex rebounded by 232.05 points, or 1.47 per cent, on strong US economic data last weekend and the lack of any major cues on Monday from foreign markets due to holidays, which supported the rupee. Fresh dollar selling by exporters and banks on holidays in key foreign markets also aided the rise.

Bonds decline
India’s 10-year bonds fell the most in 11 weeks, as a shortage of cash in the banking system made it costlier to buy debt with borrowed funds.

The demand for bonds also waned on concern the government would borrow more than planned in the financial year ending March 31, as an economic slowdown erodes revenue, according to R S Chauhan, chief dealer of treasury in Mumbai at State Bank of Bikaner & Jaipur. “The cash crunch is deterring investors from adding to bond holdings,” said Chauhan. “They are also waiting for some clarity on government debt sales.”

The yield on the 8.79 per cent notes due November 2021 rose 12 basis points, the most since October 10, to 8.49 per cent in Mumbai, according to the central bank’s trading system.

Call rate declines
The call rate ended lower on the overnight money market on Monday, owing to lack of demand and ample liquidity. The rate closed at 8.50 per cent, compared with Friday's close of 9.85 per cent. It moved in a wide range of 9.90 per cent and 8.00 per cent.