Rupee drops further; bonds rise for third straight day

Rupee drops further; bonds rise for third straight day
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First Published: Fri, Jun 08 2007. 01 51 AM IST
Updated: Fri, Jun 08 2007. 01 51 AM IST
Mumbai: The rupee fell for a second day on speculation capital inflows from abroad into stocks will slow after the benchmark index added to its biggest decline in more than a month on Wednesday.
Overseas fund managers may reduce holdings in Indian shares after their investments helped the index rise for four of the past five months. That may curb demand for the rupee, said Sudarshan Bhatt, chief trader at state-owned Corporation Bank Ltd in Mumbai. The rupee fell 0.1% to at 40.7025 against the dollar as of the 5pm close in Mumbai.
Indian bond yields rose for a third day as traders expected cash supplies to dwindle by the end of the week following a slew of bond auctions. The yield on the 10-year bond rose to 8.14%.
Overnight interest rates ended near 10-year lows at 0.2-0.3%, down from 0.3-0.4%. This suggested that cash was surplus, but traders said the situation would change after payments are completed for auctions. “I see call money at 7-8% by Monday,” a foreign bank trader said.
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First Published: Fri, Jun 08 2007. 01 51 AM IST
More Topics: rupee drops | Money Matters | Currency |