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MUMBAI: THE rupee closed weaker on Tuesday by around 6 paise at 48.41/42 against the dollar as compared to the previous close of 48.3550/3650 in the forex market.

Dealers attributed the fall in the rupee to the usual month-end scramble for greenbacks by banks and other market participants.

"The currency remained stable mostly but for the latter half of the day when the market saw some good bidding for dollars. There were some who were caught short and were mopping up dollars in a last minute bid to cover their positions,'' said a forex dealer with a private sector bank. Meanwhile, forwards eased further on account of good amount of profit-booking' with the six-month premium ending at 5.68 per cent (5.77 per cent) and the premium for one year ending at 5.51 per cent (5.56 per cent).

Securities prices rallied by around 40-50 paise as the liquidity-driven rally in the bond market continued with yields on Government securities falling to new lows.

The benchmark ten-year yield is now at 7.69 per cent with the 11.03-per cent 2012 paper closing at Rs 123.69 after opening at Rs 123.40/45. The 11.50-per cent 2011 paper which had opened at Rs 25.65/70, closed at Rs 126.07. The yield on this paper is at 7.67 per cent. The 9.81-per cent 2013 paper closed at Rs 115.38 after opening at Rs 114.90/95 and the 9.85-per cent 2015 paper ended at Rs 115.05 after opening at Rs 114.75/85.

With good buying interest in the actively traded papers, illiquid stocks too started to get traded. There was trading in some papers such as the 10.71-per cent 2016 and the 10.95-per cent 2011. Volumes dealt in the market were estimated at around Rs 5,000-6,000 crore.

According to one dealer, "There is good liquidity in the system as the market feels that there could be cut in either the small savings rate or the repo rate.''

Another dealer said that the sentiment in the market was good as participants believed that the Government may not overshoot its borrowing target by the expected Rs 25,000-30,000 crore and it may be lower than that.

Dealers in the bond market expect the RBI to come out with an auction sometime this week. In the inter-bank call money market, the call rates ruled at comfortable levels of 6.40-6.60 per cent. In the one-day repo auction, RBI received and accepted four bids of Rs 255 crore at 6.50 per cent.

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Rupee sheds 6 paise; securities rally

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