Rupee falls for the fourth day

The rupee fell for a fourth day, as investors favoured the dollar’s relative safety over emerging-market assets on speculation Greek lawmakers will fail to agree on budget cuts necessary to get financial aid.

The rupee declined on concern that inflation would accelerate after the government raised diesel prices on June 24 for the first time in a year. Greek Prime Minister George Papandreou will seek approval from his parliament on June 29 for an austerity package to win more financial aid from the European Union. Foreign funds have pulled $288 million from Indian equities this month through June 23, exchange data show.

The rupee weakened 0.1 per cent to 45.0375 per dollar at close in Mumbai, according to data compiled by Bloomberg. The currency has declined 1 percent this quarter, the worst performance among Asia’s 10 most-traded currencies after the Malaysian Ringgit and Thai baht.

Offshore forwards indicate the rupee will trade at 45.63 to the dollar in three months, compared with expectations for a rate of 45.61 at the end of last week. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.

BONDS END MIXED
The government bond closed mixed on alternate bouts of buying and selling. The 7.80 per cent government security maturing in 2021 slipped to Rs 96.92 from Rs 97.04 previously, while its yield moved up to 8.26 per cent from 8.24 per cent.

The 8.08 per cent government security maturing in 2022 dropped to Rs 98.03 from Rs 98.16, while its yield inched up to 8.35 per cent from 8.34 per cent. The 8.13 per cent government security maturing in 2022 declined to Rs 98.38 from Rs 98.48, while its yield looked up to 8.35 per cent from 8.34 per cent.

However, the 7.99 per cent government security maturing in 2017 firmed up to Rs 98.50 from Rs 98.35, while its yield moved down to 8.31 per cent from 8.34 per cent and the 7.17 per cent government security maturing in 2015 also rose to Rs 96.28 from Rs 96.24, while its yield softened to 8.29 per cent from 8.30 per cent.

The Reserve Bank of India, under the Liquidity Adjustment Facility, purchased securities worth Rs 78,045 crore from 30 bids at the one-day repo auction at a fixed rate of 7.50 per cent while sold securities worth Rs 260 crore from two bids at the one-day reverse repo auction at a fixed rate of 6.50 per cent.

CALL RATE DECLINES
The call rate declined to closeat 7.50 per cent at the overnight call money market on Monday on surfeit of liquidity in the banking system. The overnight call money rate ended lower than last Friday’s closing level of 7.70 per cent. It moved in a range of 7.70 per cent and 7.50 per cent.