Rupee drops most on Europe debt concern

The rupee fell the most in a month as investors sought the perceived safety of the dollar on concern Europe’s debt crisis will worsen.

The rupee declined 1.2 per cent to 55.97 per dollar, the biggest drop since June 22, according to data compiled by Bloomberg. It touched 55.98 earlier, the weakest level since July 9. One-month implied volatility, a measure of exchange-rate swings used to price options, rose 25 basis points, or 0.25 percentage point, to 11.55 per cent.

Bonds firm up on sustained demand
Government securities (G-sec) firmed up on sustained demand from banks and companies. The 9.15 per cent G-sec maturing in 2024 climbed to Rs 106.74 from Rs 106.55 last Friday, while its yield edged down 8.26 per cent from 8.29 per cent. The 8.15 per cent G-sec maturing in 2022 surged to Rs 100.55 from 100.4925, while its yield held steady at 8.07 per cent. The 8.33 per cent G-sec maturing in 2026 also moved up to Rs 101.13 from 101.11, while its yield also held stable at 8.19 per cent.

Call rate steady
Overnight call money rates closed stable as demand from borrowing banks matched supplies. The overnight call money rate finished stable at 8.00 per cent, it moved in a range of 8.05 per cent and 7.90 per cent.