The Hindu Business Line : Rupee slips; gilts weak

MUMBAI: The rupee closed a shade weaker against the dollar on Tuesday at 45.8625/8750. On Monday, the domestic currency had closed at 45.85 per dollar.

The forex market witnessed two-way interest in the dollar and rupee, said a trader at a foreign bank. The rupee had weakened slightly in the early trade due to US currency's strength overseas, moved up later before edging down. Public sector banks sold dollars , helping the domestic currency inch up to its closing level after it touched day's high of 45.83, traders said.

Forwards inched up reflecting the rupee's future direction; the six-month forward closed at 2.34 per cent (2.17 per cent) while the twelve-month forward finished at 1.97 per cent (1.88 per cent).

Bonds witnessed 50-60 paise slide across maturities. Lack of positive sentiment was augmented, as rumours were rife about fixed coupon securities forming part of the Government auction. The auction announcement is expected within this week as it is scheduled before October 11.

Yield on the 10-year benchmark 7.37 per cent 2014 paper soared to 6.51 per cent (6.45 per cent) at a price of Rs 106.15. The 11-year benchmark saw the yield rising to 6.45 per cent (6.39 per cent) at a price of Rs 107.20. "A large foreign bank offloaded securities during the day adding to the pressure on yields," said a trader at a large primary dealer.

Call rates hardened in the early trading to 4.75-4.80 per cent as tightness in liquidity was observed. At close, the rates had settled at 4.30-4.50 per cent.

Under the LAF window, banks parked Rs 9,430 crore by way of one-day repo with the RBI, while Rs 555 crore were absorbed through 4 bids in the 7-day repo.

In the CBLO market, 136 trades were transacted in the rate range of 4.20-4.75 per cent, as the volume reached about Rs 4,998 crore.