The Hindu Business Line : Rupee weakens

MUMBAI: Domestic currency closed at its lowest level in the week on Wednesday, closing at 46.00/01 against the dollar, weaker by about four paise from Tuesday's close of 45.86/88.

"The US trade balance data released on Tuesday weighed heavily in favour of the dollar which led to it appreciating overseas, and hence, the dollar opened bullish. The trade balance data came a $45 billion which was lower than the expected number of $49 billion, this led to strengthening of the greenback," said a senior dealer, with a private sector bank. In the first hour of trading itself the rupee touched the day's low at 46.03 but through early intervention by state-run banks perhaps at the behest of the central bank recovered to 45.95 levels, said dealers.

The forward premia have shown a sharp rise with importers covering for several following months. The six-month forward ended at 1.80 per cent (1.51 per cent) and the one-year forward ended at 1.60 per cent (1.43 per cent).

Bond prices drifted down by about 30 paise across actively traded maturities on Wednesday, with volumes at about Rs 2,000 crore, amid concerns regarding the Finance Ministry's decision on the transaction tax issue and the deferred EPF rate. The 11-year benchmark, 7.38 per cent 2015 paper opened at Rs 111.32 before it dipped to Rs 111.00/05 levels. The 10-year benchmark opened at a yield of 5.83 per cent, which moved up to 5.86 per cent. It moved from Rs 111.37 down to Rs 111.05/10. The auction of the 4.83 per cent 2006 paper on Wednesday was fully subscribed with the cut off yield of 5.05 per cent in line with expectations, said dealers.

The call rates were stable at 4.25 - 4.50 per cent. Under the LAF window the RBI received and accepted 29 bids worth Rs 4,850 crore.