Rupee rebounds from 1-week low

The rupee rose, rebounding from a one-week low, on speculation that exporters repatriated their foreign income to take advantage of a favorable exchange rate.

The currency gained for the fifth time in six days as the Dollar Index, which tracks the greenback against six major trading partners, snapped a three-day gain.

The rupee fell earlier to the lowest level since October 25 on concern Europe’s debt crisis would hurt demand for emerging-market goods and financial assets. A weaker rupee boosts the value of export earnings in local-currency terms.

The rupee advanced 0.2 per cent to 49.1875 per dollar in Mumbai, according to data compiled by Bloomberg. It touched 49.4125 earlier, the weakest level since October 25. The currency will appreciate to 47.50 in three months, Goldman Sachs Group Inc. predicts.

Offshore forwards indicate the rupee would trade at 49.99 to the dollar in three months, compared with expectations for a rate of 50.04 yesterday.

Bonds firm up
Government bond prices firmed up on good buying support from banks and companies. The 7.80 per cent government security maturing in 2021 hardened to Rs 93.08 from Rs 92.82 yesterday, while its yield declined to 8.90 per cent from 8.94 per cent.

The 8.13 per cent government security maturing in 2022 rose to Rs 94.38 from Rs 94.30, while its yield softened to 8.95 per cent from 8.96 per cent.

The 7.83 per cent government security maturing in 2018 firmed up to Rs 95.35 from Rs 95.18, while its yield moved down to 8.79 per cent from 8.83 per cent.

The 8.08 per cent government security maturing in 2022, the 7.99 per cent government security maturing in 2017, the 7.59 per cent government security maturing in 2016 and the 8.28 per cent government security maturing in 2027 were also quoted higher at Rs 94.20, Rs 96.22, Rs 95.54 and Rs 94.20, respectively. The Reserve Bank of India, under the Liquidity Adjustment Facility, purchased securities worth Rs 41,705 crore from 14 bids at the one-day repo auction at a fixed rate of 8.50 per cent.

Call rate dips
The call rate ended slightly lower at the overnight call money market here today due to lack of demand from borrowing banks.

The overnight call money rate ended slightly lower at 8.50 per cent from yesterday’s closing level of 8.55. It moved in a range of 8.60 per cent and 8.25 per cent.