The Hindu Business Line : Rupee rise halted; bond prices up

MUMBAI: The domestic currency weakened by 10 paise on Friday to end at 46.31 per dollar, putting a brake on its strengthening spree for the past three sessions. The rupee had ended at 46.20/21 against the dollar on Thursday.

The Indian currency was in downward mode in the early trading hours on back of genuine corporate demand and towards the later part of the day on inter-bank deals, dealers said. The six-month forward closed at 2.76 per cent (2.78 per cent) while the twelve-month closed at 2.41 per cent (2.46 per cent).

Bond prices shot up by over a rupee from the intra-day lows on the back of comfort factor instilled by the central bank when it announced introduction overnight fixed rate repo from August 16.

Debt market players perceive this as a signal from the Reserve Bank of India (RBI) to improve liquidity and think that a hike in the repo rate might not be on the cards.

The 10-year benchmark 7.37 per cent 2014 paper fell to Rs 104.60 during the day, only to rise by Rs 1.30 to close at Rs 105.90. The yield on the paper had risen to 6.71 per cent but eased to end at 6.52 per cent.

Call rates eased towards the close to end at about 4.25 per cent. Under the LAF window, the RBI received and accepted 11 bids worth Rs 3,320 crore.