The Hindu Business Line : Rupee range-bound; securities decline

MUMBAI: The rupee closed at 45.0650/0750 against the dollar on Wednesday after a volatile trade. On Tuesday, the domestic currency had ended at same levels.

Dealers said that the rupee was trading in narrow range in the early trade after which it touched the day's high at 44.9925, on back of dollar inflows. State-run banks stepped up dollar purchases at these levels, perhaps at the behest of the RBI, which dragged down the domestic currency, dealers said.

Forward premia were subdued and ended lower. The six-month annualised forward premia closed at 1.10 per cent (1.36 per cent) while the twelve-month annualised premia ended at 0.95 per cent (1.16 per cent).

Government securities ended lower even as they bounced off intra-day lows on news of roll-back of LPG price increase.

Prices fell about 50 paise during the day as concerns of the upcoming Rs 8,000 crore auction weighed on the minds of market players, triggering sell-off of securities.

Comments from the RBI Governor relating to maintenance of comfortable liquidity positions and the Government decision to roll back the monthly LPG price hike led to an increase of about 20 paise in bond prices.

Yield on the 7.38 per cent 2015 paper rose to 7.21 per cent before it closed lower at 7.18 per cent at Rs 101.40. The 7.55 per cent 2010 paper closed about 10 paise lower than previous close at Rs 103.15.

The cut-off yield was set at 5.28 per cent at the Rs 500 crore 91-day Treasury bill auction while it was set at 5.67 per cent at the Rs 1,000 crore 364-day Treasury bill auction, as these auctions received good response.

Meanwhile, call rates in the inter-bank market softened to 4.60 to 4.90 per cent as liquidity tightness softened.

Under the LAF window, RBI accepted all 24 bids aggregating Rs 5,520 crore in the one-day reverse repo auction.

In the CBLO market, 172 trades worth Rs 6,570.20 crore were transacted in the rate range of 4.31-5.25 per cent.