The Hindu Business Line : Longs move up; rupee loses ground

MUMBAI: The bond market saw increased trading in longer tenor papers on Wednesday. As a result prices on these papers rose by 15 paise while benchmark papers declined, dealers said.

The 10-year benchmark 7.37 per cent 2014 paper ended at Rs 108.75, lower than the previous close of Rs 108.90. The 11-year benchmark 7.38 per cent 2015 paper also fell during the day to close at Rs 109.45. Meanwhile, 12.32 per cent 2011 paper rose 15 paise to close at Rs 129.75.

According to market players, 25 basis point hike in the Fed rate did not impact the market as it was in line with expectations and was discounted. The 91-day treasury bill auction cut-off also was as per market expectations and did not impact price movement.

Call rates went as high as 5.25 per cent in a few deals but most trades were done in the range of 4.60- 4.75 per cent. The Reserve Bank of India accepted a sole bid worth Rs 150 crore in the 7-day repo auction and all 18 bids in the 1-day repo auction worth Rs 5,875 crore.

In the CBLO market, 103 trades worth about Rs 2,583 crore were transacted.

The rupee erased gains to end at 45.8550/8650 against the dollar after touching an early morning high of 45.77. It had closed at 45.8350 per dollar on Tuesday.

Traders said a weak dollar overseas saw the rupee showing signs of strengthening. The gains made were eroded during the day on the back of demand for dollars from oil companies and importers. Forwards market was range-bound as the six-month forward closed lower at 1.82 per cent (1.90 per cent) while the 12-month forward ended at 1.49 per cent (1.61 per cent).