* Rupee ends at 59.72/73 per dlr vs 59.35/36 on Fri
* India not considering offshore debt sale now, say sources
* INR seen holding between 59-60 range this week-trader
By Swati Bhat
MUMBAI, July 22 (Reuters) - The rupee weakened on Monday
after government sources told Reuters that India is not
considering issuing a sovereign bond to offshore investors right
now, dampening hopes for large dollar fund inflows which could
have changed the rupee's fortune.
The Indian government instead aims to attract dollar flows
from non-resident citizens to support the rupee or it could also
allow some companies to raise debt abroad, two senior government
officials familiar with the matter told Reuters on Monday.
The officials also said the central bank could look to raise
the key policy rate if the rupee once again weakens toward 61-62
"The sovereign bond issue not being an option and the repo
rate hike are both negatives for the rupee," said Ashtosh Raina,
head of foreign exchange trading at HDFC Bank.
"I expect the rupee to hold in the recent 59-60 per dollar
band this week."
Traders broadly expect the central bank to sell dollars via
state-run banks if the rupee tries to breach the 60 per dollar
mark, they said.
The partially convertible rupee closed at 59.72/73
per dollar compared with 59.35/36 on Friday.
Traders said the larger impact was seen on the onshore
dollar forward premiums, which shot up post the comments.
The 1-year onshore dollar premium rose as high as
447.25 points, its highest since August 1998 compared with its
close of 430.25 points on Friday.
The rupee, which fell to a record low of 61.21 on July 8,
has seen little recovery since the central bank's measures last
week. Instead, the steps roiled the bond market and pushed up
government borrowing costs.
In the offshore non-deliverable forwards, the
one-month contract was at 60.09, while the three-month was at
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 at
around 59.67 with a total traded volume of $1.9 billion.
(Editing by Prateek Chatterjee)