The Hindu Business Line : Rupee, gilts fail to hold gains

MUMBAI: Fresh foreign investment inflows and bunched-up dollar supplies led to an appreciation in the rupee's value to 44.98/99 against the dollar intra-day on Tuesday. However, the currency closed slightly weaker at 45.0750/0850. against the previous closing of 45.15/16.

After opening stronger at 45.04/05, the rupee appreciated to the day's high; at this level, substantial dollar buying by corporates and certain State-owned banks was seen, dealers said.

Exporters cancelling forward contracts in view of the appreciating rupee and weakness of the US currency against other major currencies also led to the home currency's rise.

Annualised forward premia rose during the early trading but closed lower. The six-month premia ended at 1.99 per cent (2.24 per cent) and the twelve-month at 1.74 per cent (1.90 per cent).

Reduction in oil prices led bond prices to open 50 paise to one rupee higher across maturities. This positive sentiment was also on the back of MSS auction not being part of the Treasury bill auction for a second week.

The high price level could not be sustained due to lack of buying support due to tight money supply. The 11-year benchmark 7.38 per cent 2015 paper closed at a yield of 7.14 per cent at a price of Rs 101.75 after touching Rs 101.90 during the day. The 7.55 per cent 2010 paper opened 40 paise higher, but closed at Rs 103.02, near opening levels.

Call rates remained high in a range of 6.25-6.50 per cent. There were no bids in the 1-day reverse repo auction of the Reserve Bank of India as banks borrowed Rs 13,780 crore through the reverse repo by way of 36 bids. In the CBLO market, 141 trades worth Rs 5,889.50 crore were transacted in a rate range of 6-6.25 per cent.