The rupee dropped the most in two weeks on speculation an easing recession in the US will prompt the Federal Reserve to raise interest rates later this year, boosting the appeal of the dollar.
All of the 10 most-active currencies in Asia outside Japan fell against the greenback as a gauge that tracks its strength extended the biggest advance in almost five months. Futures traders raised bets for a Fed rate increase in September after the Labor Department reported the fewest job losses in eight months in May.
Offshore contracts indicate traders predict the rupee will trade at 47.71 to the dollar in a month, compared with expectations for a rate of 47.20 on June 5. Forwards are agreements in which assets are bought and sold at current prices for future delivery. Non-deliverable contracts are settled in dollars rather than the local currency.
10-year bonds fall
Ten-year bonds fell after the government said it will sell more debt than planned for a fourth time at a scheduled auction, fuelling concern increasing supply will reduce demand for the securities.
India will raise Rs 15,000 crore by selling bonds maturing in 2014, 2021, 2027 and 2035 on June 11, the finance ministry said on June 5. The government’s original plan was to raise Rs 12,000 crore, according to a debt sale calendar published by the central bank.
The yield on the 6.05 per cent note due February 2019 rose two basis points to 6.58 per cent at the close, according to the central bank’s trading system. The price fell 0.16, or 16 paise per 100-rupee face amount, to 96.25.
The government will offer Rs 8,000 crore of the 6.07 per cent bonds due 2014, Rs 3,000 crore of the 7.94 per cent notes maturing in 2021, and Rs 2,000 crore each of the 8.24 per cent debt maturing in 2027 and the 7.40 per cent securities due 2035 at the June 11 sale, according to the finance ministry.