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Thursday, Sep 04, 2003

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Rupee weakens; gilts sale fully subscribed

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MUMBAI: The rupee lost another 4 paise on Wednesday to end the day at 45.9150/9250 against the dollar compared with Tuesday's close of 45.8750/8650.

Said a forex dealer in a private bank, "With premia touching near three-year lows today, several exporters were seen cancelling their existing forward contracts and rebooking them at today's lower rates. As a result banks came to buy spot dollars leading to the dip in the Indian rupee."

In the forwards market, premia fell drastically intra-day but later recovered.

The six months premia closed at 0.99 per cent (1.06 per cent) and the one-year closed at 1.06 per cent (1.14 per cent).

The Rs 6,000 crore auction was fully subscribed and the cut-off price came in tune with market expectation, said dealers.

The 6.17 per cent 2023 paper received bids worth over Rs 10,000 crore, reflecting the excessive liquidity in the market, but the central bank accepted bids worth the notified amount with the cut-off price fixed at Rs 101.92 and the cut-off yield at 6.00 per cent while the weighted average price was Rs 102.04.

The cut-off yield triggered a mild rally of 15-20 paise in the long-dated papers, while the shorter duration papers were rather flat.

Some indicative papers were the 6.35 per cent 2020 paper which was at Rs 105.38 before the auction result went up to Rs 105.60/65 after the cut-off came. Likewise in the 8.35 per cent 2022 that was at Rs 126.60 and went up to Rs 126.80 following the auction results.

Through the LAF, the apex bank sucked out liquidity of over Rs 32,000 crore at the repo rate of 4.5 per cent.

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