Rupee climbs to 3-year high

The rupee advanced to its highest level in almost three years, after the central bank raised borrowing costs by more than economists forecast, increasing the country’s yield advantage over developed nations.

The currency strengthened past the 44 per dollar level for the first time since April after the Reserve Bank of India increased the repurchase rate to eight per cent from 7.5 per cent yesterday. The rupee advanced 0.2 per cent to 44.0850 per dollar at the close in Mumbai, following a 0.5 per cent gain yesterday, according to data compiled by Bloomberg. It touched 43.8550 earlier, the highest since Aug. 29, 2008.

BONDS DECLINE
Government bond prices declined further due to sustained selling pressure from banks and companies.

The 7.80 per cent government security maturing in 2021 moved down to Rs 95.75 from Tuesday's close of Rs 95.79, while its yield inched up to 8.45 per cent from 8.44 per cent. The 8.13 per cent government security maturing in 2022 declined to Rs 96.99 from Rs 97.09, while its yield edged up to 8.55 per cent from 8.54 per cent.

CALL RATE RECOVERS
THE call rate closed at 8.08 per cent at the overnight call money market on Wednesday due to renewed demand from borrowing banks. It moved in a range of 8.15 per cent and 7.75 per cent.