Re at 51.73 against dollar

MUMBAI: Fears about further capital outflows from India on back of a sovereign downgrade and lower corporate earnings continue to weigh down on the rupee, pulling it down to another all time low of 51.73 against the dollar at 12 noon.

It had ended at 51.45 level on Friday. Dealers say Asian stocks continuing to lose way and concerns of India trade deficit rising further is also weakening the outlook for the rupee. BSE sensex was trading lower 2.3% at 8690 at 12 noon.

"We are still betting on some form of aggressive RBI intervention curtailing extreme depreciation pressures and subsequently bring the USD/INR pair towards our near-term equilibrium range of 52," says Abheek Barua, chief economist at HDFC Bank in a note. "In short a break beyond 52 could just be temporary," he added.

Bonds are trading range bound and gained marginally on Monday morning after RBI announced a bigger-than-expected buyback auction and as dealers are expecting a rate cut anytime now.

While yield on the old 10-year benchmark 8.24% paper maturing in 2018 fell 4 basis points to 6.30%, the new benchmark 6.05% paper expiring in 2019 traded 1 bps up at 6.01%. When yields fall, prices rise.

RBI has announced another buyback of dated government securities worth Rs 6,000 crore with a green-shoe option of Rs 3,000 crore through an auction on March 5. The next day the government will sell three dated securities for Rs 12,000 crore.

Liquidity was good with call money available at a weighed average of 4.08%, near the reverse repo rate, as per CCIL at 12 noon.