Rupee stable at mid 46-47 levels

MUMBAI: The rupee appears to be consolidating in the mid 46-47 levels, as the rupee fell 20 paisa to trade at 46.60 against the dollar at 12:30 noon, after an upswing in stocks was kept in check by the rise in the dollar against global majors. The dollar is rising from its 14 month lows, after Federal Reserve Chairman Ben Bernanke said he was thinking of an exit strategy from quantitative easing and low interest rates as the economy improves. The rupee had fallen against the dollar on Friday too, after gaining for over a week.

The dollar is recovering from a 14-month trough hit against a basket of currencies last year and pulled further away from a nine month low hit against the yen earlier in the week. The dollar index - a gauge of the greenback's movement against six global majors rose 0.3% by noon.

"The real effective exchange rate depreciated sharply in 2007-08, but a resumption in capital inflows has led to some appreciation recent months," said Taimur Baig, chief economist at Deutsche Bank. "A trend appreciation of the real exchange rate appears likely, although central bank intervention may counter the appreciation partially," the bank said in a report to clients.

Bond prices continue to come under pressure after RBI sold bonds at yields much higher than market expectations last week, with dealers saying the continuing supply of bonds could bring further pressure on prices. The Reserve Bank of India (RBI) said on Friday it had set a cut-off price of corresponding to a yield of 7.31% for 6.90% benchmark bond maturing in 2019. This key paper quoted at 7.36% at 12 .30 noon.