The Hindu Business Line : Rupee erases gains; securities weaken

The rupee weakened to 45.09/10 in the early deals as the market reacted to the fear of terror attacks on US establishments inMumbai and New Delhi, dealers said. The domestic currency moved in a tight two-three paise range, with no significant demand or supply pressures witnessed, they added.

"The rupee could test the 45 level on Wednesday, as major currencies such as euro have sharply appreciated against the dollar," said a dealer at a private sector bank.

Annualised premia on forwards declined as the six-month forward finished at 1.36 per cent (1.40 per cent), while the twelve-month forward ended at 1.16 per cent (1.15 per cent).

Selling pressure across the board led to a fall of 25 paise to 50 paise in bond prices.

Market participants reacted to threats of attacks on US establishments, dealers said. Follow-up buying was not seen after securities were sold on account of profit booking by several market players.

Meanwhile, call rates in the inter-bank market eased off considerably to 4.75 per cent to 5 per cent, as liquidity pressures were seen subsiding.

The Reserve Bank of India accepted all the five bids aggregating Rs 1,015 crore in the one-day reverse repo while no bids were received in the one-day repo auction.

In the CBLO market, 147 trades worth Rs 5,717.55 crore were transacted in the rate range of 4-5.50 per cent.