Rupee gains most in three weeks

The rupee strengthened today by the most in about three weeks, on speculation that more monetary stimulus in developed economies will boost inflows to higher-yielding emerging markets.

Global funds have pumped $8.2 billion into Indian stocks this year and their holdings of the nation's debt rose to a record $33.8 billion on February 21, exchange data show. The rupee advanced 0.6 per cent, the most since January 30, to 53.88 a dollar in Mumbai, according to data compiled by Bloomberg. One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, fell 10 basis points, or 0.10 percentage point, to 9.40 per cent.

"India has seen inflows largely because of global liquidity," said Paresh Nayar, head of money markets and currency trading at FirstRand Ltd in Mumbai. "The flows are likely to continue for some time, as any withdrawal of stimulus would mean policy makers have utmost confidence in the recovery."

Bonds close mixed
Government securities (G-sec) closed mixed on alternate bouts of buying and selling.

The 8.15 per cent G-sec maturing in 2022 edged up to Rs 102.28 from Rs 102.27 last Friday, while its yield held steady at 7.80 per cent. The 8.12 per cent G-sec maturing in 2020 moved up to Rs 101.71 from Rs 101.70, while its yield ruled stable at 7.82 per cent. However, the 8.33 per cent G-sec maturing in 2026 declined to Rs 103.54 from Rs 103.58, while its yield held steady at 7.89 per cent.

Call rates end higher
Call money rates at the overnight market finished higher due to good demand from borrowing banks. The rate finished higher at 7.85 per cent from previous closing level of 7.80 per cent. It moved in a range of 7.95 per cent and 7.25 per cent.