The Hindu Business Line : Rupee loss widens; securities plunge

"The US indicated a shortage in its oil reserves which pushed up the oil prices, with oil futures moving to about $42 per barrel. This in addition to reports of violence in Iraq moved the rupee southwards," said a senior analyst. "The nervousness in the stock market and large outward remittances taking place since the past two days reflected negatively on the domestic currency," said a dealer.

The forwards moved higher with the six-month forward closing at 1.84 per cent (1.80 per cent) and the twelve-month closing at 1.61 per cent (1.60 per cent).

Bond prices fell by over 80 paise, pushing up the 10-year benchmark yield to 5.99 per cent on fears of a high inflation figure. The 10-year benchmark touched the highest yield level since May 2003. Prices recovered towards the end of the day by about 30 paise.

The 11-year benchmark 7.38 per cent 2015 paper opened at Rs 110.85, dipped to Rs. 110, before it recovered to end at Rs 110.30. The 10-year benchmark 7.37 per cent 2014 paper opened at Rs 111. fell to It closed at Rs. 110.30.

The bond market witnessed lack of buyers, with foreign banks, mutual funds selling in the early trading hours, with cut-losses for several players being triggered, said dealers.

"Fears of a higher inflation figure to be declared on Friday, coupled with concerns of a less than adequate monsoon, has driven the yields up," said a bond trader.

"The uncertainty over issues of transaction tax looming large in addition to the rise in oil prices has made it difficult for the market participants to take a positive view on the bond prices," said a senior dealer from a private sector bank.

Call rates remained easy at 4.40-4.50 per cent. Under the LAF window, the RBI received and accepted 25 bids worth Rs 5,020 crore.