The Indian rupee climbed against the US dollar yesterday, helped by advances in the euro and strong gains in local stocks. The dollar was at Rs55.36 late yesterday in Asia, compared with Rs55.64 late Tuesday. The European common currency edged up against the dollar ahead of the European Central Bank’s rate-setting meeting, with some investors anticipating monetary easing. This, along with hopes of another round of fresh stimulus measures by the US Federal Reserve, pushed risky assets higher. Indian shares were among the best performers in Asia yesterday-the benchmark Sensex rose 2.71% to 16,454.30 — thanks to positive regional markets after Australia showed better-than-expected expansion in the economy. Still, traders warn of currency-market jolts ahead of the outcome of June 17 Greek polls. A Scotiabank note downgraded its near-term outlook on the rupee, mainly due to financial-market upheaval, “the effects of which have been intensified by the fundamental weakness of the rupee.” “This [rupee’s weakness] is a direct result of a lack of natural rupee demand onshore, due to India’s wide current-account deficit,” Scotiabank said. In the government debt market, bonds ended lower as expectations of monetary easing in Europe and the US encouraged investors to pile into riskier assets. The benchmark 8.79% 2021 bond ended at Rs102.68, compared with Rs102.94 on Tuesday. Trading volumes nearly halved. Traders pared holdings in government paper, particularly the benchmark note, ahead of an Rs150bn bond sale tomorrow The central bank will auction a new benchmark bond maturing in 2022, which will make the current 2021 paper illiquid. Over the next two weeks, bonds may find support from hopes of an interest rate cut.from gulf times.