The Hindu Business Line : Rupee gains 18 paise

MUMBAI: An easing in global crude prices coupled with handsome dollar inflows led the Indian rupee to scale a four-and-a-half month high, where it closed at 45.37/38 against the greenback on Friday, stronger by 18 paise from its previous close of 45.54/55.

Crude oil prices moving down from $55 per barrel to $50.5 per barrel helped boost sentiment in favour of the rupee, as oil companies were absent from the market, according to currency traders.

"Oil companies usually buy dollars in the forex market for oil import related payments. Although the forex market witnessed volatile movements as rupee moved against the dollar through the day, the rupee was on a solo run," said a dealer with a foreign bank.

Substantial supply of dollars were sustained throughout the day as FII inflows were seen both on the equity and debt side from foreign investors across the board. Traders said inflows to the tune of nearly $200 million might have reached Indian shores on Friday as foreign banks were selling greenbacks on behalf of foreign funds.

Annualised forward premia dived southward as the six month forward closed at 2.33 per cent (2.60 per cent) while the twelve-month premia ended at 1.95 per cent (2.2 per cent).

Bond prices rose by nearly 40 paise intra-day in medium term papers, before settling to close lower.

Falling oil prices receded inflation worries as buying interest was seen in the early hours, while later half of the day saw bond prices erasing gains as inflation number came at 7.10 per cent, higher than market expectations.

Actively traded 11-year benchmark 7.38 per cent 2015 paper rose to Rs 103.95 during the day before closing at Rs 103.60. Yield on the paper went down to 6.85 per cent before ending higher at 6.90 per cent. The 6.65 per cent 2009 paper after rising 25 paise intra-day closed at Rs 101.12 at a yield of 6.35 per cent.

Meanwhile, call rates hovered in the range of 4.65 per cent to 4.85 per cent with a few deals struck at 5 per cent. Under the LAF window, the RBI accepted all 20 bids worth Rs 5,960 crore in the 3-day reverse repo auction at the rate of 4.75 per cent.

In the CBLO market, 116 trades worth Rs 4,205.30 crore were transacted in the rate range of 1-5 per cent.