The Hindu Business Line : Bonds recover; rupee unchanged

MUMBAI: Bond prices recovered lost gains on Tuesday with crude prices showing signs of easing and a significant bout of buying interest in the market.

Dealers said although sentiment was dampened marginally following the observations and comments made in the RBI's annual report 2003-04, the market quickly bounced back having already discounted these factors.

The benchmark 10-year paper, the 7.37 per cent 2014, opened lower at Rs 108.65 to a YTM of 6.16 per cent, and fell to a low of Rs 108 30, before ending stronger at Rs 109.25 at a YTM of 6.08 per cent.

In the seven-day repo auction under the LAF, the RBI received and accepted 14 bids amounting to Rs 2,410 crore at the rate of 4.50 per cent. In the one-day repo 51 bids amounting to Rs 34,490 crore were received and accepted at the rate of 4.50 per cent.

In the CBLO market, 124 trades worth Rs 3,931.50 crore were conducted. Call rates remained in the 4.25 per cent to 4.50 per cent levels in the inter-bank market.

The domestic currency closed at 46.36/3550 against the dollar almost unchanged from its previous closing on Monday.

Dealers said, the rupee touched an intra-day low of 46.36 due to some "genuine" dollar demand, which was offset by dollar supplies when state-run banks sold in the market.

"It looks like the rupee will continue to appreciate for a while. For the first time, it seems that the Commerce Ministry is talking about not allowing the rupee to depreciate in order to support exports," he said.

Meanwhile in the forwards market, the six-month premium ended at 2.41 per cent (2.45 per cent) and the one-year premium ended at 2 per cent (2.08 per cent).