Rupee pared initial moderate gains by the end of trading on Monday, December 27, 2010. The domestic currency that was already sliding since early hours on account of month-end demand for dollar from oil refineries and importers was dragged lower by the closing hours by declining local shares during the latter part of the day. The domestic currency hit the day's high at Rs. 45.08 per dollar during initial trades and registered an intra day low at 45.28. In the spot currency market, rupee ended at 45.24, lower by around 12 paise or 0.27% as compared to previous close at 45.12.
The domestic indices that edged lower in a volatile trade after a weekend interest rate hike from China pulled stocks in China and Europe lower, weighed down the local currency. European stock markets declined on Monday, in the wake of Saturday's interest-rate hike from China. Trading in US index futures indicated that the Dow could fall 44 points at the opening bell on Monday. US stock markets were closed on Friday, for the Christmas Eve holiday. At the provisional closing bell, the key benchmark BSE Sensex dropped almost 45 points at 20028.93 while S&P CNX Nifty is down 14 points at 5998.10.
Meanwhile, rupee failed to take cues from a consistently rising euro versus the US dollar all through the day. The US dollar rallied against majors in early Asian hours on Monday after The People's Bank of China (PBOC) hiked interest rates by 25 basis points over the weekend to combat inflation, which reached a 28-month high in November when the consumer price index rose 5.1% year-over-year. However, the greenback eased slightly from its early gains and edged lower so far against the euro. The dollar rose to almost 1.3071 versus the single common currency in early Asian trades Monday and was last seen quoting at around 1.3160.
The US dollar index, which tracks the greenback against a trade-weighted basket of six major currencies, is lower by 0.30% at 80.25. Asian currencies were marginally higher against the greenback as the global currency pared some of its initial rise early today. The South Korean won was up 0.14% at 1149.10, the Taiwan dollar was higher by 0.61% at 29.51 while the Indonesian Rupiah was slightly lower by 0.05% at 9037.50 against the US dollar.
In the domestic bond market, early today, the yield on 10 year benchmark 7.80 GS 2020 federal paper on Monday ended at 7.91% up 1 bps as compared to 7.90% at close on Friday. Yield on the federal paper 7.99 GS 2017 closed at 7.81%, lower by 1 bp as against 7.82% registered in previous closing. Meanwhile, the yield on most traded federal paper 8.13 GS 2022 was at around 8%, down 1 bp as compared to Friday's close at 8.01%.
In the domestic currency futures market on the NSE, the front month December USD/INR contract opened on Monday at 45.19 per dollar mark. The contract hit an intra day high at 45.30 and registered a low at around 45.06 during the day and ended at 45.25, higher by 10 paise or 0.23% as compared to previous close at 45.15. Meanwhile, euro- rupee contract was at around 59.58, up by 0.51%, as against 59.28 registered in previous close. The JPY/INR contract edged higher 0.33% at 54.70 from 54.52 as in previous close. GBP/INR contract was at 69.92 stronger by 0.37% as against 69.66 as registered at close on Friday.
