Rupee falls on high inflation

The rupee fell, reversing earlier gains, after the latest inflation data fuelled concerns that the pace of price gains would erode returns on investments.

“The rupee would be under pressure until you see noticeable slowdown in inflation, cuts in interest rates and confirmation growth has bottomed,” Chris Walker, a London-based currency strategist at UBS AG, wrote in a report on Monday.

The currency declined 0.4 per cent to 50.31 per dollar in Mumbai, after earlier strengthening 0.4 per cent to 49.92, according to data compiled by Bloomberg. It touched 50.4375 on November 11, the lowest level since April 2009. Three-month offshore forwards traded at 51.06 to the dollar, compared with 51.07 on November 11.

BONDS END MIXED
Government bonds ended mixed on alternate bouts of buying and selling. The 8.79 per cent government security maturing in 2021, declined to Rs 98.86 from Rs 99.05 previously, while its yield moved up to 8.96 per cent from 8.94 per cent. The 7.83 per cent government security maturing in 2018 slipped to Rs 94.39 from Rs 94.43, while its yield inched up to 9.00 per cent from 8.99 per cent.

CALL RATE STABLE
The call rate closed stable at the overnight call money market on Monday on alternate demand and supply. The overnight call money rate moved in a range of 8.75 per cent and 8.55 per cent, before closing at its previous closing level of 8.65 per cent.