Rupee drops before interest-rate decision

MONEY MARKET ROUND-UP

Rupee fell before the central bank’s decision tomorrow on interest rates while importers bought dollars to settle month-end bill payments.

Demand for the US currency probably rose from companies such as Indian Oil Corp, the nation’s largest refiner, after the price of crude oil climbed almost 14 per cent in October, the biggest monthly increase since May. Reserve Bank of India Governor Duvvuri Subbarao will leave the bank’s overnight lending rate, or repurchase rate, unchanged at 4.75 per cent.

Bonds gain
10-year bonds gained for the first time in three days on speculation the central bank will keep its benchmark interest rates at record lows following a quarterly policy review tomorrow.

The nation should maintain an “accommodative” monetary policy until an economic recovery gathers strength, to Prime Minister Manmohan Singh’s economic advisory council chairman C Rangarajan, said last week.