Rupee falls by 3 paisa at 12 noon

MUMBAI: The rupee was trading in a narrow range, and was down 3 paisa at 12 noon, to trade at 49.19 against the dollar as against it'a close of 49.16 on Thursday. Bonds too lost ground, with the yield on the 10-year bechmark security going up 2 basis ponts to 5.82%. Dealers say both bonds and the local unit are likely to remain under presuure in the coming days, given India's worsening deficts both on the fiscal and current acount side.

"Strengthening US sollar, global credit squeeze and India's worsening balance of payments were behind INR's recent depreciation," says Rajeev Malik, head of India and ASEAN Economics. "However current account deficitis poised to narrow in 2009-10. Capital too are likely to improve marginally. Structural foundations of a stronger rupee are in place, " he said.

Traders are hoping for softening of policy stance from the RBI, when it meets to announce its policy review next week. Yields rose to the highest in almost two weeks on January 21. Banks and primary dealerships may have increased investments as yields on benchmark notes have added 54 basis points this month. Liquidity appears to be comfotable with call money rates hovering around 4.20% at 12 noon, near the reverse repo rate , as per CCIL.