The Hindu Business Line : Rupee up 5 paise; securities rise

The dollar traded weak overseas against other major currencies such as euro and pound sterling on the back of a phenomenally lower US non-farm payroll data. The forwards market witnessed volatile movement with the twelve-month forward opening at 60-61 paise and plunging to about 44 paise premium.

Banks were mainly receiving premium with stop losses for some of them being triggered adding to panic, said dealers. The six-month forward closed at 1.33 per cent (1.67 per cent), while the twelve-month forward closed at 1.16 per cent (1.53 per cent).

Bond prices have shot up by about 50 paise across maturities. Although the market opened lower than previous close, it improved towards the noon and the rise was sustained till the close.

The major factor influencing the rally is the lower than expected US non-farm payroll data, which drove down the US ten-year yield about 20 basis points, said dealers. The 10-year US paper was at a yield to maturity (YTM) of 4.74 per cent and plunged to 4.54/55 per cent after the data was released on Friday.

The 8.07 per cent 2017 paper opened at Rs 117.80 and ended about 50 paise higher at Rs 118.30. The 10-year benchmark 7.37 per cent 2014 paper opened at Rs 112.30/35, rose to Rs 112.55, before closing at Rs 112.47.

Dealers believe that the market improvement also signals a change in perception of the traders regarding the Budget being amassed with populist measures. They also attribute the rise in prices to some of the market players being left empty handed after facing tremendous redemption pressure in June.

The inter-bank call rates opened at 4.40-4.50 per cent but during the later part of the day were at 4.25-30 per cent. Under the LAF window the RBI received and accepted 41 bids worth Rs 20,990 crore.