* Rupee ends at 59.13/14 per dlr vs 59.76/77 on Tues
* Cbank measures help boost rupee; but real flows awaited
* Fwd premiums hit 15-yr highs as cash may tighten more
By Swati Bhat
MUMBAI, July 24 (Reuters) - The Indian rupee posted its
biggest single-day gain in nearly a month on Wednesday as the
central bank's renewed efforts to shore up the currency by
tightening cash conditions began to yield results.
The Reserve Bank of India took new steps on Tuesday to
support the rupee, including making it even harder for lenders
to access funds with measures such as lowering the amount banks
can borrow under its daily liquidity window.
The efforts signal the RBI will stay the course with its
defence of the currency despite the risks to economic growth.
(For full wrapup of the day's events see )
"I think these measures will stay in place for at least
three to four months. These are not temporary," said Param
Sarma, chief executive at NSP Forex.
"These steps will only eliminate volatility from the market
but for real appreciation bias to set in we need real flows,
which can come in through an overseas bond sale. The rupee will
hold between 58.50-60 band as long as these measures stay,".
The partially convertible rupee closed at 59.13/14
per dollar compared with 59.76/77 on Tuesday. It rose to as high
as 59.0150, its strongest since July 1. The unit gained 1.1
percent on the day, its biggest single-day gain since June 28.
Rates and equity markets, however, reacted negatively to the
further tightening of liquidity with the benchmark 10-year bond
yield rising to a 14-month high of 8.50 percent
while the 1-year overnight swap rate rose to a
near 5-year peak.
Traders will continue to monitor any comments from
policymakers for near-term direction.
"Rupee is likely to strengthen further towards 58-57 levels
in the coming days as the central bank's actions are giving some
strength to the local currency," the head of foreign exchange
trading at a private bank said.
Expectations of further tightening of domestic rupee
liquidity pushed up onshore forward rates. The one-year onshore
forward premium rose as high as 518.75 points, its
highest since August 1998.
Traders said the spot rupee was also helped by some long
unwinding seen in the offshore non-deliverable forwards. The
one-month NDF contract was at 59.57 while the
three-month was at 60.46.
In the currency futures market, the most-traded
near-month dollar/rupee contracts on the National Stock
Exchange, the MCX-SX and the United Stock Exchange all closed
around 59.13 with a total traded volume of $3.3 billion.
(Editing by Jijo Jacob)