Rupee snaps 2-day decline on dollar sale

The rupee advanced on speculation exporters sold their overseas earnings, taking advantage of the currency’s approach toward this month’s low.

It rose 0.2 per cent to 54.96 per dollar in Mumbai, according to data compiled by Bloomberg. It earlier touched 55.22, approaching 55.26 hit on December 21, which was the lowest level since November 29.

Funds based abroad bought $3.1 billion more Indian shares than they sold this month through December 20, taking their total additions this year to $23.2 billion, according to Securities & Exchange Board of India data. The currency had weakened earlier after US Senator Joseph Lieberman said time was running out for lawmakers and President Barack Obama to agree on a budget deal by year-end to avoid triggering more than $600 billion in tax increases and spending cuts.

“The rupee has gained probably because some exporters sold dollars,” said Vikas Babu, a currency trader at state-owned Andhra Bank in Mumbai. “That helped overcome the bearish undertone due to weak global cues.”

The currency fell 1.1 per cent last week, the biggest loss since the five days through November 9. It dropped 3.4 per cent this year after plunging 16 per cent in 2011. The market will be shut tomorrow for Christmas.

Bonds firm up
Government securities (G-Sec) firmed up on sustained demand from banks and corporates, while the call money rates ended higher at the overnight call money market here on Monday due to fresh demand from borrowing banks.

The 8.15 per cent G-Sec maturing in 2022 climbed to Rs 100.1325 from Rs 100.04 yesterday, while its yield moved down to 8.13 per cent from 8.14 per cent. The 8.33 per cent G-Sec maturing in 2026 surged to Rs 100.78 from Rs 100.7325, while its yield inched down to 8.23 per cent from 8.24 per cent.

Call rate ends higher
The overnight call money rate finished higher at 8.10 per cent from last Friday's close of 7.90 per cent. It moved in a range of 8.15 per cent and 7.90 per cent.

The Reserve Bank of India (RBI) under the Liquidity Adjustment Facility (LAF) purchased securities worth Rs 1,503.90 billion in 45 bids at the two-days repo auction at a fixed rate of 8.00 per cent.