Financial Daily from THE HINDU group of publications
Tuesday, Aug 20, 2002

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Rupee dips; securities gain

Our Bureau

Mumbai: THE rupee closed marginally weaker on Monday at 48.5850 against the dollar as compared to Friday's close of 48.5750 in an active forex market.

Forex dealers said, nationalised banks were mopping up dollar liquidity in the market that lead to weakening in the rupee. "Dollar buying was significant, probably to offset some of the bunched up supplies that trickled in over the weekend,'' said a dealer with a private sector bank.

Meanwhile, according to dealers, the forex market seems to have largely shrugged off the RBI statement that "there is no immediate proposal under consideration to cut Bank rate by 0.50 per cent''.

"Usually when the RBI comes out with any such statement there is an immediate reaction in the premium. But this did not happen on Monday. This indicates the surplus liquidity situation in the market and the bullishness towards a lower interest rate regime,'' said a forex dealer.

Forwards remained relatively flat with the six-month premium ending at 4.26 per cent (4.22 per cent) and the premium for one-year ending at 4.36 per cent (4.46 per cent).

Bond prices closed higher by around 15-20 paise in the Government securities market, despite some volatility and uncertainties surrounding rumours of a possible bank rate cut.

Interest was clearly visible in papers in the long and medium segment, which rallied by around 10 paise during opening, but came down following an RBI statement clarifying, that contrary to some news reports, "there is no immediate proposal under consideration to cut Bank rate by 0.5 per cent''.

However, bond prices picked up again around close.

The 10.18 per cent 2026 paper opened at Rs 123.90/95 and closed higher at 124.09. The 7.40 per cent 2012 opened at 101.45/48 and closed at Rs 101.62.

Call rates remained flat ranging between 5.65 per cent and 5.75 per cent.

In the one-day repo under the LAF, the RBI received 8 bids amounting to Rs 1,1560 crore of which all the bids were accepted but for a partial amount of Rs 8,093 crore at the rate of 5.75 per cent.

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