The Hindu Business Line : Rupee, gilts rebound

The rupee opened the day at 44.59/61 and touched an intra-day high of 44.41 with good dollar inflows coming in. Nationalised banks then stepped in to buy up dollars, said a dealer in a private bank. Consequently, the intra-day low reached 44.83.

"The market has gone berserk and I'm not able to make any sense of it. The forex market has become a two-way street and perhaps the RBI desires it so,'' said a dealer. A two-way movement in the rupee would typically send importers on the back-foot and scare them into covering their payment obligations.

In the forward market the discount story continues. The six months forward closed at - 0.15 per cent and the one-year closed at - 0.56 per cent.

The Government securities prices gained by 15-30 paise on news of the latest exit polls, which suggest a NDA comeback at the Centre. The US Federal Reserve Chairman, Mr Alan Greenspan's decision to keep Fed rates untouched for the immediate future was another positive factor for the domestic markets.

Some indicative papers on Wednesday were the 8.07 per cent 2017 paper, which opened at Rs 124.55 and closed at Rs 124.85.The 10-year, 7.37 per cent 2014 paper opened at Rs 117.35 and closed higher at Rs 117.47.

Liquidity was ample with call rates stable at 4 per cent to 4.50 per cent. Through the LAF window, the central bank accepted surplus liquidity worth over Rs 16,000 crore at the repo rate of 4.5 per cent