Rupee rises for a fifth day

THE rupee rose for a fifth day, its longest run of gains in almost a month, as overseas investors stepped up purchases of the country’s assets to take advantage of growth in Asia’s third-biggest economy.

The currency appreciated to the strongest level in two months today, as global funds bought $734 million more Indian stocks than they sold last month through June 29, according to exchange data. India’s $1.3-trillion economy expanded 7.8 per cent in the first quarter of 2011 from a year earlier, compared with 8.3 per cent in the previous three months, government data showed.

“Capital inflows into stocks indicate the outlook for India’s economy,” said Naveen Raghuvanshi, a Mumbai-based currency trader at Development Credit Bank Ltd. “Equities have rebounded.”

The rupee appreciated 0.4 per cent to 44.4275 per dollar at close in Mumbai, accor-ding to data compiled by Bloomberg. The currency touched 44.4575 earlier, the strongest level since May 3.

Offshore forwards indicate the rupee would trade at 44.97 to the dollar in three months, compared with expectations of 45.11 at the end of last week. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.

BONDS CLOSE MIXED
Government bonds closed narrowly mixed on alternate bouts of buying and selling.

The 7.80 per cent government security maturing in 2021 moved down to Rs 96.31 from Rs 96.35 previously, while its yield inched up to 8.36 per cent from 8.35 per cent. The 8.13 per cent government security maturing in 2022 declined to Rs 97.56 from Rs 97.66, while its yield moved up to 8.47 per cent from 8.45 per cent. The 8.08 per cent government security maturing in 2022 fell to Rs 97.30 from Rs 97.32, while its yield held steady at 8.46 per cent.

However, the 7.59 per cent government security maturing in 2016 rose to Rs 97.00 from Rs 96.91, while its yield eased to 8.36 per cent from 8.38 per cent. The 7.83 per cent government security maturing in 2018 also finished slightly higher at Rs 97.17 from Rs 97.16, while its yield softened to 8.38 per cent from 8.39 per cent previously. The Reserve Bank of India, under the Liquidity Adjustment Facility, purchased securities worth Rs 31,355 crore from 19 bids at a one-day repo auction for a fixed rate of 7.50 per cent.

CALL RATE FIRMS UP
THE call rate firmed up on the overnight call money market today on shortage of funds in the banking system, amid good demand from borrowing banks. The overnight call money rate finished higher than the previous closing level. It moved in a range of 7.60 per cent and 7.00 per cent.