Rupee records first fall in 3 days

The rupee weakened the first time in three days on speculation that oil importers increased purchases of dollars in two months to settle month-end payments.

The currency fell, as the European Central Bank had reportedly opposed restructuring its Greek bond holdings, adding to concern that Greece would struggle to win a deal to reduce its debt. The rupee strengthened beyond 50 a dollar earlier, as the Reserve Bank of India (RBI) reduced lenders’ cash-reserve ratios to 5.5 per cent from six per cent yesterday and signalled it may cut interest rates to boost growth.

The rupee declined 0.1 per cent to 50.12 per dollar in Mumbai, according to data compiled by Bloomberg. It touched 49.99 earlier, near the 49.92 yesterday, the strongest level since November 14.

“There was oil-related demand for dollars and the concerns about Europe seem to have resurfaced,” said Vikas Babu, a trader at state-run Andhra Bank in Mumbai. “Developments in Europe would be crucial, something RBI has also highlighted.”

The central bank was “closely” monitoring external developments and would “take action” to prevent disruptive movements in the rupee, it said in a statement.

Bonds settle mixed
Government securities (G-Secs) settled mixed on alternate bouts of buying and selling. The 8.79 per cent G-Sec maturing in 2021 recovered to Rs 103.10 from Tuesday’s close of Rs 102.85, while its yield moved down to 8.32 per cent from 8.35 per cent. The 9.15 per cent G-Sec maturing in 2024 hardened to Rs 105.55 from Rs 105.32, while its yield eased to 8.43 per cent from 8.46 per cent. The 7.83 per cent (G-Sec) maturing in 2018 inched up to Rs 97.58 from Rs 97.57, while its yield softened to 8.33 per cent from 8.34 per cent.

Call rate firms up
The call rate firmed up further at the overnight call money market on Wednesday due to sustained demand from borrowing banks and scarcity of liquidity in the banking system. The rate moved in a range of 9.30 per cent and 8.85 per cent before closing at 9.20 per cent, compared with yesterday’s closing level of 8.90 per cent.