The Hindu Business Line : Rupee up 4 paise; bonds stay firm

MUMBAI: The domestic currency gained about four paise on Tuesday to end at 46.35/36 against the dollar on back of supply of dollars from nationalised banks, perhaps at the behest of RBI, dealers said.

Opening weaker, the currency slid to the day's low of 46.45550 but recovered on greenback supply countering demand. Import cancellations also added to dollars in the market. The forwards moved up as the six-month forward closed at 2.75 per cent (2.7 per cent), while the 12-month forward ended at 2.5 per cent (2.39 per cent).

Bond prices moved up for the second consecutive session as the maturities ended higher by about 40 paise from Monday's levels. The central bank's announcement to issue dated security of one-year tenor under MSS (market stabilisation scheme) for the amount of Rs 5,000 crore improved the market sentiment.

Earlier during the day, the market had fallen on the statement of Dr Rakesh Mohan, Deputy Governor of RBI, that the MSS auction would be as planned earlier i.e. bonds of 2-4 year tenure.. The 7.37 per cent 2014 paper saw a 6 basis points drop in yields as it closed at 6.5 per cent. The price rose intra-day to Rs 106.50, but closed at Rs 106.5/10, a net rise of over 35 paise from previous close.

Call rates were in the range of 4.4-4.5 per cent. Under the LAF window, the RBI received and accepted 12 bids worth Rs 2,445 crore in the seven-day repo, while in the 1-day repo it accepted all 40 bids worth Rs 24,055 crore. In the collateralised borrowing and lending obligation market (CBLO), 83 trades worth Rs 2,186.70 crore were struck.