Rupee advances most in two weeks

Last Updated: Wed, Aug 22, 2012 05:08 hrs

The rupee strengthened the most in two weeks on optimism European leaders will agree on measures to contain their region's debt crisis at meetings this week.

The rupee advanced 0.3 per cent from August 17 to 55.58 per dollar, the biggest gain since August 7, according to data compiled by Bloomberg. It touched 55.46 earlier, the strongest level since August 13. It touched a one-week high on speculation a scheduled auction of debt-purchase permits to overseas funds on Tuesday will help spur fund flows to India.

Luxembourg Prime Minister Jean-Claude Juncker, the head of the Euro-area group of finance ministers, visits Greece tomorrow to discuss its debt programme. German Chancellor Angela Merkel and French President Francois Hollande meet in Berlin on August 23 and both are set to talk separately with Greek Prime Minister Antonis Samaras later in the week.

Bonds react downwards
Government bonds reacted downwards on selling pressure from banks and corporates.

The 8.33 per cent government security maturing in 2026 dropped to Rs 99.41 from 99.47 previously, while its yield edged up to 8.40 per cent from 8.39 per cent. The 8.15 per cent government security maturing in 2022 fell to Rs 99.35 from Rs 99.40, while its yield inched up to 8.25 per cent from 8.24 per cent. The 8.19 per cent government security maturing in 2020 slid to Rs 99.30 from Rs 99.39 while its yield gained to 8.32 per cent from 8.30 per cent.

Call rates rule stable
The overnight rates remained steady at the overnight call money market here on Tuesday as demand from borrowing banks matched supplies. The rate finished stable at eight per cent from last Friday's level.

More from Sify: