Rupee rebounds, bonds slide

The rupee climbed the most in almost two weeks before an auction of bond-purchase permits to foreign investors that could increase inflows to the nation’s fixed-income market.

The currency rebounded from the biggest weekly loss since June, as the Securities and Exchange Board of India (Sebi) offered Rs 26,859 crore ($5 billion) of quotas on Monday to foreigners to buy rupee-denominated government and company notes. Offshore funds poured $5.4 billion into local debt so far this year, boosting holdings to $31.45 billion.

The rupee advanced 0.7 per cent to 53.4775 per dollar in Mumbai, the biggest gain since October 11. It dropped 1.9 per cent last week — the most since the five days through June 22.

Bonds react downwards
Government bonds reacted downwards on selling pressure from banks and companies. The 8.33 per cent government security maturing in 2026 moved down to Rs 100.8375 from 100.8575 previously, while its yield held steady at 8.22 per cent.

Call rate recovers
Call rates recovered at the overnight call money market here on Monday on fresh demand from borrowing banks. The overnight call money rate closed higher at 8.1 per cent from last Friday’s close of eight per cent.