Re at 13 month high, bonds rise

MUMBAI: The rupee rose to a 13 month high against the dollar on speculation that higher local growth will help draw funds from foreign funds. The currency has appreciated 3.5% in the past week and 13% from its lifetime low of 52.20, as foreign funds bought a net $12.4 billion of local stocks in the year till date. The rupee rose 30 paisa to 46.36 against the dollar and dealers say the momentum could raise it higher, dealers said.

Alistair Chan, economist at Moody���s Economy says the market expectations for higher interest rates have seen the rupee trade at its highest level against the dollar in over a year. ���(Deputy governor���s comment ) suggests that the (central) bank will not intervene to prevent the rupee from strengthening further. Indeed, a stronger rupee would lower import prices, especially for fuel,��� a Moody���s Economy report added.

���The central bank is not much concerned with the day-to-day changes in the value of the rupee. On the long term basis, we are happy the way it is mov-ing,��� KC Chakroborty, deputy governor of RBI, told reporters on the sidelines of seminar on Wednesday.

Wholesale prices rose for a fourth week - climbed 0.7% in the week to September 26 from a year earlier - would also compel RBI to raise interest rates sooner rather than later, dealers said. Elsewhere globally, the dollar has been on slippery ground again after stronger-than-expected Australian jobs data and lower initial jobless claims in the USA boosted sentiment for emerging market assets. Dollar index - a gauge of the greenback���s movement against six global majors - fell 0.6%.

Government bond prices rose on Wednesday after the central bank announced bullish underwriting cut offs for primary dealers. As per RBI data, primary dealers agreed to underwrite Friday���s Rs 10,000 cr auction at rates as low as 83 paisa to Rs 2.17 for the three securities.

The 10-year benchmark bond yield ended at 7.20% lower than Wednesday close of 7.25%. The central bank auctioned Rs 9,000 cr of treasury bills on Wednesday and Rs 9,500 cr of state loans on Thursday. It will auction Rs 10,000 cr of long dated securities on Friday.