Rupee falls to 15-month low

The rupee weakened to its lowest level in 15 months on speculation that foreign funds would pare holdings of riskier emerging-market assets amid mounting concern over Europe’s debt crisis.

The currency fell for a seventh day, as the Bombay Stock Exchange Sensitive Index dropped on Tuesday, increasing losses of local shares to 20 per cent this year. The rupee dropped as oil importers purchased dollars, said Parthasarathi Mukherjee, president of treasury and international banking at Axis Bank Ltd in Mumbai. India imports about 80 per cent of its crude.

Offshore forwards indicate the rupee would trade at 48.07 in three months, compared with expectations of 47.73 yesterday. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars. The rupee is the worst performer among Asia’s 10 most-traded currencies this year, with a six per cent loss.

BONDS DECLINE
Government bonds declined due to fresh selling pressure from banks and companies.

The 7.80 per cent government security maturing in 2021 dropped to Rs 96.57 from Rs 96.78 yesterday, while its yield moved up to 8.33 per cent from 8.29 per cent. The 8.13 per cent government security maturing in 2022 declined to Rs 97.91 from Rs 98.07, while its yield looked up to 8.42 per cent from 8.40 per cent.

The 7.83 per cent government security maturing in 2018 fell to Rs 97.46 from Rs 97.59, while its yield rose to 8.34 per cent from 8.31 per cent. The 8.08 per cent government security maturing in 2022, the 8.07 per cent government security maturing in 2017 and the 8.28 per cent government security maturing in 2027 were also quoted lower at Rs 97.75, Rs 98.85 and Rs 97.43, respectively.

The Reserve Bank of India, under the Liquidity Adjustment Facility, purchased securities worth Rs 60,065 crore from 25 bids at the one-day repo auction at a fixed rate of 8.00 per cent.

CALL RATE STEADY
The call rate ended stable on overnight call money market on Tuesday on alternate bouts of demand and supply. The overnight call rate finished stable at yesterday’s closing level of 8.05 per cent. It moved in a range of 8.10 per cent and 7.90 per cent.