2012.05.28 14:03:07 Indian Rupee Gains For A Third Day On Better Risk Mood; Bonds Flat

At 1200 GMT Latest Change USD/INR 55.19 -0.18 8.79% 2021 Bond 8.51% Unchanged Call Rate 8.18% -2 BPs Forward Dollar Premium/Discount* April 2.74 -0.04 *Forward Dollar Premium/Discount are midpoints of bid-offer spreads MUMBAI (Dow Jones)--The Indian rupee rose against the U.S. dollar for a third consecutive session Monday, thanks to improved risk sentiment across the region as fears over Greece's exit from the euro zone ebbed. The dollar was at INR55.19 late Monday in Asia, compared with INR55.37 late Friday. The rupee tried to take a stab at the psychologically important level of 55, but could only climb to 55.01. It fell to a record low of 56.37 Thursday. Volatility in the pair was visibly lower Monday because of positive signs of growing electoral support for pro-bailout parties in Greece. Analysts had forecast the dollar's weakness as it has technically lost the upside momentum, thanks to profit-taking on long positions over the past couple of sessions. Still, India's weak domestic fundamentals won't let the rupee have the upper hand in the near- to medium-term, said Sacha Tihanyi, a currency strategist at Scotiabank. The current week is fairly important for India with January-March gross domestic product data due Thursday and April trade numbers scheduled on Friday. "The rupee is unlikely to receive support via growth data so long as market expectations are met, as [our expectation of] 6% [growth] would represent the fifth consecutive quarter of growth momentum decline," Tihanyi said. "Combine this with a growing trade deficit and you'll have nothing fundamentally positive from India's balance of payments point of view," he added. Tihanyi said that the dollar's upward trend remains intact, and that there is no obvious technical signal of a sustained reversal unless the greenback falls below 53.50. In the government debt market, bonds ended flat as traders awaited details of a INR150 billion bond sale to be held later this week. The benchmark 8.79% 2021 bond ended at INR101.77, compared with INR101.79 Friday. Bonds rose early in the session on hopes the Reserve Bank of India will continue secondary market purchases and bond buybacks to ease cash tightness among banks. Data Friday showed the RBI bought government bonds worth INR126 billion on the secondary market in the week to May 18. The market expects an announcement of another bond buyback by late Tuesday. Trading may be cautious ahead of the January-March GDP growth data Thursday, which DBS expects to stay soft at 6.0% year-on-year. While this translates into sequential growth, DBS said trend GDP growth has slowed to well below 8% for a few years now. -By Khushita Vasant, Dow Jones Newswires; 91 22 6145 6122; khushita.vasant@dowjones.com (END) Dow Jones Newswires May 28, 2012 08:03 ET (12:03 GMT)