Rupee up as foreign funds step up buys

The rupee strengthened after foreign funds stepped up purchases of local-currency company bonds to meet a quota deadline.

The Securities & Exchange Board of India auctioned $5 billion of corporate debt-purchase quotas on Nov. 30 to foreigners. Foreign investors added $898 million to holdings of Indian debt last week, exchange data show, following net sales of $275 million in the previous period.

“Inflows are supporting the rupee as today is the deadline for the transactions,” said Vikas Babu, a currency trader at state-owned Andhra Bank in Mumbai. “We will also see month-end demand for dollars from importers.”

The rupee advanced 0.3 per cent to 49.078 per dollar in Mumbai, according to data compiled by Bloomberg. The currency has strengthened 8.1 per cent this year.

Three-month onshore forward contracts traded at 50.14 a dollar, compared with 50.31 yesterday, while non-deliverable contracts traded at 50.18 from 50.36 yesterday. Forwards are agreements to buy or sell assets at a set price and date. Non- deliverable contracts are settled in dollars.

Bonds rise
Government securities (G-Secs) firmed up on good buying support from banks and companies. The 9.15 per cent G-Sec maturing in 2024 rose further to Rs 106.62 from Rs 106.49 yesterday, while its yield moved down to 8.29 per cent from 8.31 per cent. The 8.79 per cent G-Sec maturing in 2021 firmed up to Rs 103.79 from Rs 103.68, while its yield eased to 8.21 per cent from 8.23 per cent.

The 7.83 per cent G-Sec maturing in 2018 hardened to Rs 97.71 from Rs 97.65, while its yield softened to 8.31 per cent from 8.32 per cent. The 8.19 per cent G-Sec maturing in 2020 and the 8.97 per cent G-Sec maturing in 2030 also ended higher at Rs 99.46 and Rs 103.65, respectively.

The Reserve Bank of India, under the Liquidity Adjustment Facility, purchased securities worth Rs 180,645 crore from 70 bids at the one-day repo auction at 8.50 per cent.

Call rate firms up
The call rate improved further at the overnight money market here on Tuesday, owing to sustained demand from borrowing banks. The overnight call money rate closed higher at 9.15 per cent, compared with yesterday’s close of 9.00 per cent. It moved in a range of 9.15 per cent and 8.75 per cent.