Rupee advances on deficit cut optimism

The rupee advanced on optimism the nation’s new finance minister will announce measures to narrow the budget deficit and attract investment.

The rupee advanced 0.2 per cent to 55.30 per dollar, according to data compiled by Bloomberg. It rose as much as 0.7 per cent earlier.

One-month implied volatility, a measure of exchange-rate swings used to price options, fell 20 basis points, or 0.20 percentage points, to 10.20 per cent.

Palaniappan Chidambaram, in his first speech after taking office, said on August 6 he would unveil steps for fiscal consolidation and clarify tax laws.

Bond rates end mixed
Government securities (G-sec) ended mixed on alternate bouts of buying and selling.

The 8.15 per cent G-sec maturing in 2022 eased to Rs 100.04 from Rs 100.06 yesterday, while its yield held steady at 8.14 per cent. The 9.15 per cent G-sec maturing in 2024 moved down to Rs 106.04 from Rs 106.08, while its yield ruled steady at 8.35 per cent.

The 8.19 per cent G-sec maturing in 2020 declined to Rs 99.77 from Rs 99.82, while its yield inched up to 8.23 per cent from 8.22 per cent.

Call rates remain stable
Call rates remained steady at the overnight market here on Thursday on good demand from borrowing banks matching supplies. The rate finished stable at 8.05 per cent.