The Hindu Business Line : Rupee weaker; bonds decline

Though the domestic currency opened stronger, heavy demand for dollars from oil companies caused it to move lower, said dealers. Some private and public sector banks were seen mopping up dollars. Market players attribute the volatility in the market to lack of supply of dollars, as the foreign investors are wary of investing, according to dealers.

Market players say the domestic currency will remain in the 45.75-46.30 levels till clear guidelines are presented.

The forwards have moved northwards yet again with the six-month forward closing at 1.90 per cent (1.65 per cent) and the twelve-month closing at 1.55 per cent (1.50 per cent).

Bond prices fell around 40 paise intra day following the adjournment of Parliament on Monday, which led to further delay regarding the clarification of the transaction tax issue.

The prices had opened at Saturday's closing levels before falling later during the day. However, bond prices recovered some lost ground before closing, dealers said.

Volumes were noticeably thin at about Rs 1,500 crore. The 7.38 per cent 2015 paper opened at Rs 111.40 fell to Rs 111.00 during the day but recovered to Rs 111.20 in the later period. The ten-year benchmark had more or less similar levels in terms of prices but it's yield moved higher to 5.87 per cent from 5.83 per cent.

"The market is expecting a removal of the transaction tax from the debt market side or a marginal tax of about 0.0025 - 0.0050 paise. Also the EPF meeting scheduled from Tuesday is awaited to give a clear direction on the interest rates of the fund," said a senior bond market trader.

The call rates were easy at 4.00-4.25 per cent. Under the LAF window, the RBI received and accepted 38 bids worth Rs 15,950 crore.