Rupee rises on Europe stimulus optimism

The rupee strengthened the most in two weeks, erasing earlier losses, on speculation that European Central Bank officials would on Thursday confirm measures to contain their region’s debt crisis. The rupee advanced 0.5 per cent to 55.65 per dollar, the biggest increase since August 23, according to data compiled by Bloomberg. It touched 56.04 earlier, the weakest level since August 16.

Bonds improve on sustained demand
Government securities (G-sec) firmed up further on good buying support from banks and companies. The 8.33 per cent G-sec maturing in 2026 surged to Rs 100.05 from Rs 99.94 previously, while its yield declined to 8.32 per cent from 8.34 per cent.

The 8.15 per cent G-sec maturing in 2022 climbed to Rs 99.92 from Rs 99.79, while its yield moved down to 8.16 per cent from 8.18 per cent. The 8.19 per cent G-sec maturing in 2020 also rose to Rs 99.5725 from Rs 99.5250, while its yield held steady at 8.27 per cent. The 8.07 per cent G-sec maturing in 2017, the 9.15 per cent maturing in 2024 and the 8.97 per cent maturing in 2030 also quoted higher at Rs 99.6375, Rs 105.9125 and Rs 104.05, respectively.

Call rates higher
Call rates recovered on fresh demand from borrowing banks. The rate finished higher at eight per cent from 7.30 per cent yesterday. It moved in a range of seven to eight per cent. The Reserve Bank of India under the Liquidity Adjustment Facility purchased securities worth Rs 21.20 billion in two bids at the one-day repo auction at a fixed rate of eight per cent and sold securities worth Rs 0.80 billion from two bids at the one-day reverse repo auction at a fixed rate of seven per cent.