The rupee fell for the first time in three days on signs Europe’s debt crisis was slowing economic activity in Asia and denting demand for emerging-market assets.
The Bombay Stock Exchange’s sensitive index of shares snapped a three-day advance, as Italian Prime Minister Mario Monti begins lobbying parliament today to win support for a euro 30-billion ($40 billion) package of austerity and growth measures to trim the euro-region’s second-biggest debt. European leaders would meet in Brussels for a December 9 summit to tackle the region’s crisis.
The rupee declined 0.4 per cent to 51.4162 per dollar in Mumbai, according to data compiled by Bloomberg. The currency rose 2.1 per cent last week.
“The concerns about the fallout from the European crisis will remain at least until the European summit on Friday,” said Naveen Raghuvanshi, a Mumbai-based currency trader at Development Credit Bank Ltd. “The rupee’s fall is being limited by comments over the weekend from the Reserve Bank of India (RBI), which is keeping speculators cautious.”
RBI Deputy Governor Subir Gokarn had, on December 3, said the monetary authority still had tools such as strategic capital controls to arrest the currency’s slide.
Bonds rise
Government securities (G-secs) continued their march for the fifth session in a row on consistent demand from banks and companies. The 8.79 per cent G-sec maturing in 2021 rose to Rs 101.3850 from Rs 100.93 last weekend, while its yield dipped further to 8.58 per cent from 8.65 per cent. The 9.15 per cent G-sec maturing in 2024 also flared up to Rs 103.3550 fromRs 102.93, while its yield tumbled to 8.71 per cent from 8.77 per cent previously. The 7.83 per cent G-sec maturing in 2018, too, firmed up further to Rs 96.62 from Rs 96.2650, while its yield dropped to 8.53 per cent from 8.60 per cent. The 8.97 per cent G-sec maturing in 2030, the 7.80 per cent maturing in 2022 and the 8.30 per cent maturing in 2040 jumped to Rs 101.19, Rs 94.90 and Rs 93.70, respectively.
Call rate rises
The call rate improved at the overnight call money market today on lack of funds in the banking system. The rate closed higher at 8.65 per cent, compared with the last close of 8.55 per cent, after moving in a range of 8.75 per cent and 8.30 per cent.