The Hindu Business Line : Rupee up 5 paise; gilts range-bound

MUMBAI: The rupee appreciated for the third consecutive session on Wednesday to close 5 paise stronger at 45.8550/8650, against 45.90/91 on Tuesday.

The rupee appreciated as much as 45.6975 per dollar at about 11.00 a.m when several banks stepped in to buy dollars for profit booking, dealers said. Market participants expect the central bank to be in favour of an appreciating currency as they also look ahead to forex inflows.

Forwards premia rose as the six-month forward closed at 1.52 per cent (1.20 per cent) while the twelve-month forward finished at 1.40 per cent (1.14 per cent).

Bond prices remained range-bound with a small rally near the close of trading, dealers said.

The ten year benchmark 7.37 per cent 2014 paper closed at the yield of 6.11 per cent as its price was at Rs 109.00 lower that previous close of Rs 109.15. The 11-year benchmark 7.38 per cent 2015 paper closed at the yield of 6.17 per cent at Rs 109.55.marginally lower than previous finish.

Dealers said prices improved slightly after a few bids were rejected by the central bank in the 91-day Treasury bill auction in which cut-off yield came at 4.75 per cent, lower than market expectation of 4.83 per cent. In the case of 364-day Treasury bill auction cut-off yield came slightly higher than expectation at 5.25 per cent.

Prices fell in early trading on comments of the Deputy Governor of RBI regarding more monetary measures to be taken for curbing inflation, even as advance tax payments did not have a major impactCall rates were about 4.45- 4.50 per cent. Under the LAF window the RBI accepted all 40 bids in 1-day repo and all 7 bids in the 7-day repo worth Rs 19,890 crore and Rs 1,710 crore respectively.

In the CBLO market 117 trades were transacted worth Rs 3,633.20 crore.