Re marginally down to 47.74, bonds trade flat

MUMBAI: The rupee fell marginally to 47.74 against the dollar on Tuesday, as currencies worldwide weakened against the dollar. Despite this, the local unit continues to trade near its two months high, last seen in June 2009.

Government bonds are expected to rally on Wednesday with the central bank announcing late evening that it will buy up to Rs 6,000 crore of bonds on Thursday from the open market.

Both the dollar and yen have been falling against most major currencies ever since data showed US gross domestic product contracted at a less-than-projected 1% annual rate after shrinking 6.4% in the prior three months. This raised hopes of quicker global economy recovery, leading many traders towards non-dollar riskier assets.

But this chase for riskier emerging market and commodities-based currencies took a U-turn on Tuesday. The dollar index ��� a gauge of the dollar���s movement against six major currencies ��� was up 0.1% by late evening. The key stock market index BSE Sensex was also marginally down by 0.6%.

As per data out on Tuesday, personal incomes in the US fell 1.3% in June, more than forecast and the biggest drop in four years, indicating that consumer spending could take some time to recover.

Global traders are now waiting for data on the number of Americans signing contracts to buy previously-owned homes in
June for further clues about the global economy.

Government bond prices traded flat on Tuesday and the 10-year benchmark bond ended at the 7% mark after cut-offs announced by RBI in a state development loans auction were much higher than what the market expected.