Rupee drops ahead of Europe summit

The rupee weakened the most in more than two weeks, as importers bought dollars to settle payments before a European summit this week, aimed at preventing the region’s debt crisis from spreading.

The rupee declined 0.6 per cent to 51.7175 per dollar in Mumbai, according to data compiled by Bloomberg, the biggest loss since November 21. Local financial markets were shut yesterday. “There are expectations that a plan would be agreed in Europe, but considering there is no concrete reason to be bullish in the near term, importers would take advantage of any strengthening into 51,” said J Moses Harding, executive vice- president at IndusInd Bank Ltd, Mumbai. “Even if a plan is agreed in Europe, implementing it would be a long-term effort.”

Bonds rise
Government securities (G-secs) closed mixed on alternate bouts of buying and selling by banks and companies, after five sessions of strong gains. The 8.79 per cent G-sec maturing in 2021 fell to Rs 101.2750 from Rs 101.3850 Monday, while its yield edged up to 8.59 per cent from 8.58 per cent. The 9.15 per cent G-sec maturing in 2024 also declined to Rs 103.26 from Rs 103.3550.

Call rate remains firm
The call rate remained positive at the overnight call money market on Wednesday. The rate settled higher at 8.70 per cent, compared with 8.65 per cent on Monday.