Rupee falls from 2-month high

The rupee retreated from a two- month high on speculation that global funds are reducing holdings of the nation’s shares ahead of data expected to show quickening consumer-price gains.

The currency snapped a two-day advance, ahead of a report that is likely to show inflation accelerated for a second month after the government raised domestic fuel prices in late June, according to the median estimate of economists surveyed by Bloomberg. The Bombay Stock Exchange’s Sensitive Index declined 0.7 per cent, following a 1.2 per cent loss on July 8.

The rupee weakened 0.3 per cent to 44.48 per dollar at close in Mumbai, according to data compiled by Bloomberg. It reached 44.2975 on July 8, the strongest level since May 3. India’s wholesale-price index rose 9.66 percent last month from a year earlier, according to a Bloomberg survey ahead of data due July 14. The gauge climbed 9.06 percent in May.

Offshore forwards indicate the rupee will trade at 45.02 to the dollar in three months, compared with expectations of 44.81 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 firm up
Government bonds today firmed up on fresh buying support from banks and companies.

The 7.80 per cent government security maturing in 2021 hardened to Rs 96.55 from Rs 96.34 last Friday, while its yield declined to 8.32 per cent from 8.35 per cent. The 8.13 per cent government security maturing in 2022 rose to Rs 97.80 from Rs 97.57, while its yield fell to 8.43 per cent from 8.47 per cent.

The 8.08 per cent government security maturing in 2022 too firmed up to Rs 97.49 from Rs 97.31, while its yield looked down to 8.43 per cent from 8.48 per cent.

The 8.07 per cent government security maturing in 2017, the 7.83 per cent government security maturing in 2018, the 7.59 per cent government security maturing in 2016 and the 8.26 per cent government security maturing in 2027 also ended higher at Rs 98.78, Rs 97.30, Rs 97.04 and Rs 97.05, respectively.

The Reserve Bank of India, under the Liquidity Adjustment Facility, purchased securities worth Rs 25,925 crore from 13 bids at one-day repo auction at a fixed rate of 7.50 per cent.

Call rate declines
The call rate declined on the overnight call money market today, owing to ample liquidity in banking system. The overnight call money rate moved in a range of 7.70 per cent and 7.45 per cent before closing at 7.50 per cent, compared with 7.60 per cent last weekend.