The Hindu Business Line : Borrowing plan lifts bonds; rupee steady

MUMBAI: The government securities traded in a narrow range on Monday with the sentiment improving after the announcement of Government borrowing programme.

The Government plans to issue bonds for Rs 44,000 crore in the second half of the fiscal to March 2005, lower than the market expectation of Rs 50,000 crore.

The 10-year benchmark 7.37 per cent 2014 paper closed at Rs 108.80 with a yield to maturity of 6.15 per cent, higher than the previous close of 6.09 per cent. The 11-year benchmark 7.38 per cent 2015 paper ended at Rs 109.70.

Call rates in the inter-bank market moved up to around 4.55 - 4.75 per cent as liquidity in the system was impacted after the CRR hike came into effect.

The 25-basis point hike in CRR, which came into effect on September 18, resulted in an outflow of about Rs 4,000 crore from the banks, dealers said.

Liquidity was hit also due to advance tax outflow of nearly Rs 18,000 crore due on September 15.

In the 7-day repo auction, the RBI accepted all 12 bids worth Rs 3,220 crore. It accepted all 26 bids in the 1-day repo auction and all 4 bids in the 14-day repo auction worth Rs 9,335 crore and Rs 820 crore respectively.

The repo amount had significantly reduced from the previous week's average of Rs 23,000 crore, dealers said.

In the CBLO market, 109 trades worth around Rs 3,400 crore were transacted in the rate range of 4.49-4.70 per cent.

The rupee finished unchanged from previous close as it ended at 45.87/88 against the dollar. The currency had finished at 45.87/88 on Friday.

Demand from oil corporates and importers drove the rupee down to the day's low at 45.97 in the early morning trade. It later recovered on the back of supply of dollars from exporters to close higher, dealers said. Forwards closed higher as the six month finished at 1.89 per cent (1.75 per cent) and the 12-month ended at 1.58 per cent (1.50 per cent).