Rupee rises as debt inflows increase

The rupee strengthened for a second day, as exchange data showed foreign investors stepped up purchases of the nation’s bonds.

The Securities & Exchange Board of India auctioned $5 billion of corporate debt-purchase quotas on November 30 to foreigners, who must utilise the allocations by February 28 or let these expire. Foreign funds lifted holdings of rupee-denominated notes worth $98 million in the first two days of this week, following last week’s net sales of $275 million.

The rupee advanced 0.1 per cent to 49.20 per dollar in Mumbai, according to data compiled by Bloomberg. The rupee is “taking support from foreign investors’ buying,” Pramit Brahmbhatt, chief executive officer at the Indian unit of Alpari Financial Services, wrote in an e-mail on Thursday. “Oil importers restricted the rupee’s gain.”

Bonds end 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 103.89 from Rs 103.73, while its yield declined to 8.20 per cent from 8.22 per cent yesterday.

The 9.15 per cent G-Sec maturing in 2024 also bounced back to Rs 106.64 from Rs 106.40 previously, while its yield dropped to 8.29 per cent from 8.32 per cent. The 8.19 per cent G-Sec maturing in 2020 rose to Rs 99.59 from Rs 99.50, while its yield slipped to 8.26 per cent from 8.28 per cent. The 8.28 per cent G-Sec maturing in 2018 improved to Rs 98.06 from Rs 97.93, while its yield softened to 8.51 per cent from 8.52 per cent.

The Reserve Bank of India, under the Liquidity Adjustment Facility, purchased securities worth Rs 147,135 crore from 54 bids at the one-day repo auction at 8.50 per cent.

Call rate settles stable
The call rate held stable on Thursday, owing to matching demand and supply of liquidity in the banking system. The rate ended stable at its overnight closing level of 8.50 per cent. It moved in a range of 8.85-8.40 per cent.