The Hindu Business Line : Re firms up; gilts fall

The rupee opened at 44.60/62 against the dollar and sank to an intra-day low of 44.71 on a bout of aggressive dollar buying by banks across the board. However, later during the day, a number of them came in and unwound long dollar positions, taking the rupee back up to end at its closing levels. Dealers said, that the rupee firmed up on account of positive sentiment as a result of the exit polls which suggest that the NDA might win with a majority. Meanwhile, forwards continued to trade in deep discount, with the six-month segment at - 1.10 per cent (-0.15 per cent) and the one-year segment ending at -0.70 per cent (-0.56 per cent).

Bond prices opened high on positive sentiment on the news of exit polls but started falling with the news of Bank of England hiking its repo rate by 0.25 percentage points.

The 8.07 per cent 2017 opened at Rs 125.10 and closed lower at Rs 124.85, while the 7.37 per cent 2014 opened at 117.50 and fell to Rs 117.40. Dealers said, that market will be in a wait-and-watch mode on Friday and will react depending on how the inflation figures turn out.

Meanwhile, the 12-year FRB auction, for Rs 6,000 crore, was oversubscribed with the RBI receiving 127 competitive bids amounting to Rs 17,140.00 crore, and 3 non-competitive bids amounting to Rs 10.40 crore. All the non-competitive bids were accepted while 18 competitive bids amounting Rs 5,989.60 crore were accepted. The cut-off spread was fixed at 0.04 per cent and the base rate for the first half-year was at 4.45 per cent per annum. The rate of interest for the first half year is 4.49 per cent.

The RBI accepted Rs 3,050 crore as underwriting from PDs. Meanwhile in the inter-bank market, call rates remained at 4.25 per cent. In the 7-day repo under LAF, the RBI received 39 bids amounting to Rs 9,915 crore at the rate of 4.50 per cent.