The Hindu Business Line : Rupee strengthens; securities down

Dealers said, the market continues to be flushed with supplies, and the domestic currency is unlikely to depreciate sharply, unless there is intervention from the Reserve Bank of India.

After opening the day at 45.42/50/45, the rupee strengthened to an intra-day high of 45.3950, a level which was last seen on November 17, 2003, when rupee opened at 45.39/40.

"It remains to be seen what the central bank's stance with the rupee will be this year. Last year they let the rupee slip, despite the tremendous dollar supplies in the market, in a bid to alert corporates to hedge their uncovered forex positions," said a dealer.

With early elections expected, it is difficult to form a firm view on the rupee in the long-term, dealers said.

Meanwhile, in the forwards market, premium for six months closed at 0.04 per cent and the premium for one year closed at 0.15 per cent, as against Friday's closing levels of 0.15 per cent and 0.40 per cent for six months and one year respectively.

Bond prices dipped by around 10 paise across maturities in the government securities market, in continuation of the `correction in price levels', which started on Friday.

The 7.40 per cent 2012 paper opened at Rs 115.45/50 and dipped to Rs 115.35/40, while the 7.46 per cent 2017 opened at Rs 118.90 and fell to Rs 118.75/80.

Dealers said the market, which ran out of steam on Friday on account of higher inflation figures, continued to remain sluggish on Monday on account of `positive industrial indicators'. "Whenever it looks like industrial recovery is imminent, it is not the best news for the bond market because it means that liquidity will be constrained with an increase in credit offtake," said a dealer.

Meanwhile, call rates hovered around 4.50 per cent levels in the inter-bank market.

In the one-day repo the RBI received and accepted 42 bids amounting to Rs 27,960 crore at the rate of 4.50 per cent, while in the fortnightly repo, for 11 days, the apex bank received and accepted 11 bids amounting to Rs 7,145 crore at the rate of 4.50 per cent.