The rupee strengthened for a second day on speculation international investors will buy the nation’s assets after the government reported the slowest manufacturing inflation in a year. Funds based abroad added $278 million to holdings of Indian shares on March 12, exchange data show. Prices of factory goods rose 5.75 per cent in February from a year earlier, the slowest pace since January 2011, a commerce ministry report showed on Wednesday.
The rupee advanced 0.1 per cent to 49.9050 per dollar in Mumbai, according to data compiled by Bloomberg.
One-month implied volatility, a measure of exchange-rate swings used to price options, was unchanged at 9.75 per cent, according to data compiled by Bloomberg.
Three-month onshore forward contracts traded at 50.99 a dollar, compared with 51.00 yesterday, and offshore non- deliverable contracts were at 51.05 from 51.00. Forwards are agreements to buy or sell assets at a set price and date. Non- deliverable contracts are settled in dollars.
Bonds end mixed
The government securities (G-Sec) ended mixed on alternate bouts of buying and selling, while call rate recovered at the overnight call money market here on Wednesday due to fresh demand from borrowing banks.
The 8.79 per cent G-Sec maturing in 2021 firmed up to Rs 103.32 from Rs 103.05 yesterday, while its yield declined to 8.28 per cent from 8.32 per cent. The 9.15 per cent G-sec maturing in 2024 hardened to Rs 106.57 from Rs 106.17, while its yield dropped to 8.30 per cent from 8.35 per cent.
The 7.83 per cent G-sec maturing in 2018, the 7.40 per cent G-sec maturing in 2012 and the 8.97 per cent G-sec maturing in 2030 also ended higher at Rs 97.4150, Rs 99.75 and Rs 103.60, respectively.
Call rate recovers
The overnight call money rate finished higher at 8.90 per cent from yesterday's close of 8.80 per cent. It moved in a range of 8.95 per cent and 8.75 per cent. The Reserve Bank of India, under the Liquidity Adjustment Facility (LAF), purchased securities worth Rs 1,24,855 crore from 58 bids at the one-day repo auction at a fixed rate of 8.50 per cent.