The rupee gained on speculation Federal Reserve Chairman Ben S Bernanke will on Tuesday hint at further steps to boost US growth, such as quantitative easing. The rupee advanced 0.4 per cent to close at 55.1 per dollar in Mumbai, according to data compiled by Bloomberg. The currency, which touched a record low of 57.3 on June 22, has bottomed out and will strengthen to 54 in the coming days, according to Naveen Raghuvanshi, a trader at Development Credit Bank Ltd, Mumbai. One-month implied volatility, a measure of exchange-rate swings used to price options, rose five basis points, or 0.05 percentage point, to 12 per cent. Three-month onshore rupee forwards traded at 56.10 per dollar, compared with 56.24 yesterday.
Bonds react downwards
Government bonds reacted downwards on heavy selling pressure from banks and companies. The 9.15 per cent government security maturing in 2024 dipped to Rs 106.43 from Rs 106.68 previously, while its yield rose to 8.30 per cent from 8.27 per cent.
The 8.15 per cent government security maturing in 2022 fell to Rs 100.39 from Rs 100.67 and yield moved up to 8.09 per cent from 8.05 per cent. The 8.19 per cent government security maturing in 2020 slid to Rs 100.20 from Rs 100.35, while its yield edged up to 8.15 per cent from 8.13 per cent. The 8.79 per cent government security maturing in 2021, 8.33 per cent government security maturing in 2026 and 8.24 per cent government security maturing in 2018 were also quoted lower at Rs 103.35, Rs 100.90 and Rs 100.42, respectively.
Call rates recover
Call rates recovered at the overnight call money market here on Tuesday on fresh demand from borrowing banks. It finished higher at 8.10 per cent from yesterday’s closing level of 7.90 per cent. It moved in a range of 8.10 per cent and 7.95 per cent.
The Reserve Bank of India under the Liquidity Adjustment Facility purchased securities worth Rs 66,495 crore from 34 bids at the one-day repo auction at a fixed rate of eight per cent and sold securities worth Rs 5 crore from one bid at the one-day reverse repo auction at a fixed rate of seven per cent.