Rupee strengthens most in a week

The rupee strengthened the most in more than a week on optimism international investors will buy local assets after data showed manufacturing gathered pace last month.

It gained 26 paise to close at more than a week’s high of 52.95/96 against the US currency on sustained dollar selling by exporters amid signs of fresh capital inflows.

Weak dollar demand from importers amid persistent dollar offloading by exporters supported the rupee's value to gain, forex dealers said.

Meanwhile, BSE benchmark index Sensex fell by 56.7 points to settle at 15,882.6. The dollar index was up by nearly 0.4 per cent against a basket of currencies.

“We can see a temporary correction till 52.80 levels, still the overall trend is of weakness for rupee,” Abhishek Goenka, CEO, India Forex Advisors said.

Bonds fall again
Ten-year bond yields were near the lowest level in more than a week on optimism a central bank plan to buy government debt will boost demand.

The Reserve Bank of India said yesterday it would purchase Rs 12,000 crore ($2.3 billion) of notes due in 2017, 2021, 2022 and 2027 in an open-market auction on January 6. It bought Rs 41,200 crore of securities since November 24, official data show, to ease a cash crunch at banks and help a record sovereign borrowing program succeed. India boosted its annual debt-sales target by 8.5 per cent last week to Rs 510,000 crore.

“The RBI’s open-market purchases are keeping yields down this week,” said Debendra Kumar Dash, a fixed-income trader at Development Credit Bank in Mumbai.

Call rate stable
The overnight call money moved in a range of 9.00 per cent and 8.50 per cent, before concluding stable at its yesterday’s closing level of 8.50 per cent.