Re cheaper, Bonds yield fall

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Mumbai: The Indian rupee on Wednesday virtually touched the crucial 49 level before ending at a seven-week lowof 48.88/89 against the US dollar, cheaper by 44 paise, in sympathy with weak local stocks amid heavy capital outflows.

The domestic currency was last seen at this level in May. It had closed at 49.40/42 a dollar on May 15 and settled at 47.88/89 against the dollar in the following trading day. Indian bonds gained for the first time this week after the Central bank said it will purchase existing government debt at an auction on Thursday. The yield on the 6.07 % note due May 2014 dropped nine basis points to 6.38 % The price rose 0.35, or 35 paise per 100-rupee face amount, to 98.73. A basis point is 0.01%.

The rupee unit resumed weak at 48.76/77 a dollar against its last close of 48.44/45 a dollar and later traded in a range of 48.73 and 48.94 during the day.

Dealers at the Interbank Foreign Exchange market said the slide in equity market raised fears of capital outflows.

Yields on benchmark five-year notes slid from a one-week high as the Reserve Bank of India yesterday said it will offer to buy as much as 75 billion rupees ($1.5 billion) of securities maturing in 2019, 2023 and 2032. Bonds also rose as oil prices fell for a sixth straight day, the longest losing streak since December, tempering speculation inflation will quicken.