Rupee dips most in three weeks as funds sell stocks

MONEY MARKET ROUND-UP

The rupee dropped the most in three weeks after investors increased sales of local assets as the nation proceeded with its biggest corporate fraud investigation at Satyam Computer Services.

The currency erased all of last week’s 1 per cent gain after stock exchange data showed overseas funds sold Indian shares worth $262.4 million on January 7, the most since October 29. The benchmark share index lost 12 per cent in the past three trading sessions, the most in such a period since October, after Hyderabad-based Satyam’s Chairman Ramalinga Raju admitted last week that he’d fabricated $1 billion in cash and assets.

 

The rupee fell 1.2 per cent to 48.8425 a dollar at close. That is the biggest slide since December 24. The currency dropped as low as 48.865 earlier.

The rupee’s losses were tempered as a government report showed industrial production unexpectedly rose in November, after declining in the previous month for the first time in 15 years.

Bond yields fall
Government bonds rose the most since September 2001 on speculation that the government will cut gasoline and diesel prices, helping ease inflation further from a 10- month low.

Benchmark 10-year securities rebounded after their record weekly drop pushed yields to the highest in almost a month, luring buyers including banks and securities companies. The benchmark stock index dropped a third day and the rupee slid the most in three weeks. Bonds pared gains after a government report today showed industrial production rose in November, belying forecasts for a second monthly contraction in output.

The yield on the benchmark 8.24 per cent note due April 2018 fell 41 basis points to 5.79 per cent at close. The price rose Rs 3.15 per Rs 100 face amount to 117.40. A basis point is 0.01 percentage point.

The government may cut the prices of petrol, diesel and LPG in a few days, CNBC-TV18 reported on January 10, citing Oil Minister Murli Deora. Petrol prices may be reduced by Rs 5 a litre and diesel by Rs 3, the television channel reported.