The rupee fell on speculation that importers stepped up dollar purchases to meet payments ahead of the March 31 financial year-end. The currency reversed an earlier gain on concern higher oil prices would boost India’s import costs, according to Corporation Bank. Brent oil has risen 11.7 per cent this year to $125.31 a barrel. The rupee rose earlier on speculation that gold imports would slow after the government increased rates on the metal, helping rein in the nation’s current-account deficit.
“We saw sustained demand for dollars from importers,” said Sudarshan Bhatt, chief currency trader at state-run Corporation Bank in Mumbai. “Oil prices are also a concern.”
The rupee declined 0.1 per cent to 50.23 a dollar in Mumbai, according to data compiled by Bloomberg, after rising as much as 0.2 percent. The currency dropped 0.7 per cent last week. One-month implied volatility, a measure of exchange-rate swings used to price options, fell 25 basis points to 9.50 per cent, according to data compiled by Bloomberg.
Three-month onshore forward contracts traded at 51.32 a dollar, compared with 51.33 on March 16, and offshore non-deliverable contracts were at 51.34 from 51.36. Forwards are agreements to buy or sell assets at a set price and date.
Bond yields near year-high
Bond yields were near this year’s highest level on speculation that the government’s record debt-sale programme for the year beginning April 1 would dampen the demand for existing securities. The yield on the 8.79 per cent bonds due November 2021 stood at 8.42 per cent in Mumbai, compared with this year’s highest level of 8.43 per cent at the end of last week, according to the central bank’s trading system. The rate has jumped 21 basis points since February 29. One-year interest-rate swaps, or derivative contracts used to guard against fluctuations in funding costs, rose one basis point to 8.23 per cent, data compiled by Bloomberg show.
Call rate falls
The call rate fell at the overnight call money market on Monday due to lack of demand from borrowing banks. The rate closed at 8.75 per cent, compared with Friday’s level of 9.10 per cent. It moved in a range of 9.00 per cent and 8.75 per cent.
