The Hindu Business Line : Rupee firms up; bond prices fall

MUMBAI: The domestic currency ended Tuesday on a stronger note at 46.35/36 per dollar, strengthened by dollar inflows from a large foreign fund, said dealers. The rupee closed seven paise higher from the previous day's close at 46.42/43.

In early trading, demand for dollars from nationalised banks pushed the Indian currency down to 46.49/52. At these levels, huge supply of dollars was seen from a few banks funded by inflows from a large foreign fund, possibly CalPERS, dealers said. There was also substantial remittance received by a public sector enterprise,said a dealer with a private sector bank.

Forwards moved in sync with the spot rupee , said dealers. The six-month forward closed at 2.53 per cent (2.48 per cent) while the 12-month closed at 2.28 per cent (2.15 per cent).

Bond prices ended below the previous day's close due to selling pressure on account of profit-booking even as the EPF rate cut had boosted sentiment in the early hours, said dealers.

The 10-year benchmark, 7.37 per cent 2014 paper fell about 80 paise from morning levels to close at Rs 105.95 at the yield of 6.53 per cent. The yield on the 11 year floating rate paper issued on Monday rose to 5.18 per cent before closing at 5.13 per cent at Rs 99.90.

Bond market participants expect the Cabinet committee meeting going on today, to give a perspective on inflation. Call rates tightened on account of heavy demand for funds from a large public sector bank, said dealers. The call rates were about 4.25-4.60 per cent. Under the LAF window, the RBI received and accepted 20 bids worth Rs 6,085 crore.