Rupee strengthens further by 29 paise

MUMBAI: The rupee continued to trade near its pre-Lehman Brothers fiasco highs as the local unit strengthened by further 29 paise to 46.61 against the dollar at 4 pm following greenback's weakness against other currencies. This is the level the rupee was trading in September ���08 before the credit market crisis struck in October 2008.

The rupee has now risen for four sessions in a row and has gained close to 12% from its record low of 52.2, hit in early March, even as key stock market index BSE Sensex has more than doubled. The global economic recovery has prompted investors to seek higher- yielding assets like those in emerging markets.


Dealers said weak dollar overseas following weaker-than- expected US job data kept in check the choppiness in the equity markets, boosting the sentiment for the rupee.

The dollar has been falling since Monday, losing ground against a basket of currencies as the outlook for low US rates was reinforced by weaker-than-expected jobs data and after a G7 ministers meeting at the weekend failed to cheer traders. The consensus among traders is that the Federal Reserve will not rush to raise interest rates.

The dollar index, a measure of its performance against six major currencies, was flat by 4 pm.
Government bond prices further fell on Wednesday as the market braces for the supply of another Rs 10,000 cr worth of bonds. Governor Subba Rao���s comments hinting at an early monetary policy tightening have been weighing on prices.

Hopes of hike in the Held To Maturity portfolio limits for banks are fast fading. The 10-year benchmark bond traded at 7.27% higher than Tuesday close of 7.22%.

The central bank will auction Rs 9,000 cr of treasury bills on Wednesday Rs 9,500 cr of state loans on Thursday and Rs 10,000 cr of long dated securities on Friday.