Rupee below 50 again, bonds rise

MUMBAI: The rupee closed below the 50-mark against the dollar on Wednesday, as stock losses added to speculation that FIIs would keep pulling out their holdings.

Indian overnight cash rates closed lower on Wednesday for a second straight session, with demand for funds falling in the second half of the reporting fortnight. Bonds rose again, with traders widely expecting rate cuts in the coming days.

The rupee ended at 50.02 against the dollar, 0.7% weaker than 49.66 at Tuesday���s close. It hit a low of 50.03 in late trade, its weakest since October 27 when it hit a record low of 50.29. Dealers said some banks were buying dollars in the onshore market to sell offshore and cash in on the price difference. These dealers are betting that the rupee is set to touch the 52-mark against the dollar soon.

The currency slid by the most in a week after Sebi data showed that FIIs increased sales of local shares. It also weakened, as traders raised bets against currency in the overseas forwards market. Offshore forward contracts showed traders increased bets for how far the rupee will weaken in the next month. Non-deliverable contracts showed an implied rate of Rs 50.83 to the dollar against 49.53 at the end of last week.

The benchmark BSE Sensex Index fell 1.8% after gaining as much as 3.4% earlier in the day. Liquidity, once again, remained comfortable as overnight call rates closed at 6.40%, little changed from Tuesday���s close of 6.50%.