The rupee fell the most in more than a week on concern that Europe’s debt crisis would worsen, sapping demand for emerging-market assets. Foreign funds cut holdings of local shares by $157 million in the first two days of this week, exchange data show. Yesterday, euro- area lenders sought more cash from the European Central Bank than economists estimated, reducing optimism the region’s debt crisis would be contained.
“It’s risk-off again today,” said Sudarshan Bhatt, chief currency trader in Mumbai at state-owned Corporation Bank. “Europe’s debt problems may reduce capital inflows and we will also see some demand for dollars from importers to meet month- end payments.”
The rupee depreciated 0.5 per cent to 52.73 a dollar in Mumbai, according to data compiled by Bloomberg, the biggest drop since December 14.
The currency pared losses after two government officials said India planned to borrow as much as Rs 50,000 crore by pledging land and shares, to help bridge the fiscal deficit. The officials asked not to be identified before a public announcement.
Bonds settle mixed
Government securities settled mixed on alternate bouts of buying and selling. The 9.15 per cent government security maturing in 2024 moved up to Rs 105.48 from Rs 105.45 yesterday, while its yield softened to 8.44 per cent from 8.45 per cent. The 8.79 per cent government security maturing in 2021 rose to Rs 103.02 from Rs 102.97, while its yield eased to 8.33 per cent from 8.34 per cent. The 8.13 per cent government security maturing in 2022 also quoted higher at Rs 98.29 from Rs 98.25 previously, while its yield looked down to 8.37 per cent from 8.38 per cent.
Call rate remains firm
The call rate firmed up further at the overnight call money market on Thursday, owing to sustained demand from borrowing banks. The rate closed higher at 9.75 per cent, compared with yesterday's closing level of 9.65 per cent. It moved in a range of 9.90 per cent and 9.50 per cent.