Rupee falls, approaches one-year low

The rupee fell for a third day, approaching the weakest level in almost a year, on speculation that the nation’s gold importers bought dollars to make payments as prices of the metal retreated.

Traders in the world’s biggest user of the yellow metal probably stepped up purchases as bullion declined more than four per cent since September 5, according to Vikas Babu, a currency trader at state-owned Andhra Bank. The rupee strengthened earlier as the Bombay Stock Exchange’s Sensitive Index advanced 1.2 percent, fuelling optimism foreigners will boost purchases of local shares.

The rupee declined 0.1 per cent to 46.17 per dollar at the close in Mumbai, according to data compiled by Bloomberg. The currency fell to 46.225 on August 25, the weakest level since September 16, 2010.

Offshore forwards indicate the rupee will trade at 46.58 to the dollar in three months, compared with expectations of 46.49 yesterday. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.

BONDS END MIXED
Government bond prices closed mixed on alternate bouts of buying and selling.

The 7.80 per cent government security maturing in 2021 declined to Rs 96.6575 from 96.7175 yesterday, while its yield inched up to 8.31 per cent from 8.30 per cent. The 8.08 per cent government security maturing in 2022 eased to Rs 97.70 from Rs 97.72, while its yield held steady at 8.40 per cent.

The 7.83 per cent government security maturing 2018 and the 7.59 per cent government security maturing in 2016 were also quoted lower at Rs 97.43 and Rs 97.32, respectively. However, the 8.13 per cent government security maturing in 2022 firmed up to Rs 98.03 from Rs 97.98.

The 7.99 per cent government security maturing in 2017, the 8.30 per cent government security maturing in 2040 and the 7.17 per cent government security maturing in 2015 were also quoted higher at Rs 98.38, Rs 96.42 and Rs 96.52,respectively.

The Reserve Bank of India, under the Liquidity Adjustment Facility, purchased securities worth Rs 3,215 crore from four bids at the one-day repo auction at a fixed rate of 8.00 per cent.

CALL RATE STEADY
The call money rate ended settled the day at its previous closing level of 8.00 per cent. It moved in a range of 8.05 per cent and 7.75 per cent.