The rupee had a modest start to the week gaining 12 paisa to close at 49.88 against the dollar, while government securities fell with bond houses selling securities ahead of the auction scheduled later this week. The rupees close is still a six-week high. Both markets will be closed on Tuesday due to Ambedkar Jayanti.
Dealers said upswing in some Asian currencies and local stock market powered the rupees gains. However, the local unit did give up some of its early morning gains after some banks bought dollars to cover their short dollar positions. Volumes were low with the rupee trading in a narrow range of 15 paisa, said DCB associate vice president Navin Raghuvanshi. There was not much activity in the market, he added.
The dollar edged up against yen in a quiet trade on Monday with many international players still away for the Easter holiday.
Bonds fell amidst talk that investors will demand higher yields at the bond auction this week, the third this month. After market hours on Thursday, the government announced an auction of Rs 12,000 crore of bonds on April 17. The yield on the 10-year benchmark bond ended at 6.75%, off an early low of 6.62%, its lowest since March 24. The bond had ended Thursday at 6.70%.
The economy expanded at less than 7% in the last fiscal year, the slowest pace in six years, due to the global recession, Prime Minister Manmohan Singh said on Monday. This has once again raised the hopes of rate cuts among traders.