Rupee rises to one-week high

The rupee rose to a one-week high on optimism that foreign investors would boost purchases of local assets after government data showed factory output rose at the fastest pace in seven months.

The currency strengthened for the third time in four days. Funds based abroad added $218 million to holdings of Indian stocks last week, exchange data show. “The industrial production data was marginally positive for the rupee,” said Jonathan Cavenagh, a Singapore-based currency strategist at Westpac Banking Corp. “There are still concerns about inflation and growth, and inflows could slow to reflect this.”

The rupee advanced 0.1 per cent to 49.94 per dollar in Mumbai, according to data compiled by Bloomberg. It touched 49.79 earlier, the strongest level since March 5. One-month implied volatility, a measure of exchange-rate swings used to price options, fell 35 basis points to a one-week low of 9.75 per cent, according to data compiled by Bloomberg.

Bonds decline
Government securities (G-Secs) declined on fresh selling pressure from banks and companies. The 8.79 per cent G-Sec maturing in 2021 declined to Rs 103.05 from Rs 103.22 yesterday, while its yield edged up to 8.32 per cent from 8.30 per cent. The 9.15 per cent G-Sec maturing in 2024 dropped to Rs 106.17 from Rs 106.24, while its yield inched up to 8.35 per cent from 8.34 per cent. The 8.19 per cent G-Sec maturing in 2020 fell to Rs 99.04 from Rs 99.17, while its yield rose from 8.33 per cent to 8.36 per cent.

Call rate eases
The call rate eased at the overnight money market on Tuesday due to lack of demand from borrowing banks. The rate closed slightly lower at 8.80 per cent, compared with yesterday’s close of 8.85 per cent. It moved in a range of 8.90 per cent and 8.70 per cent.