The Hindu Business Line : Rupee strengthens

MUMBAI: Aided by strong foreign investment flows and a weak trend in the dollar, the domestic currency gained 17 paise on Tuesday to close at 44.63/64. On Monday, the domestic currency had closed at 44.80/81.

"One way upward movement of the rupee today was also assisted by withdrawal of dollar buying by state run banks, perhaps at the behest of RBI, towards afternoon," said a dealer at a private sector bank.

Although, export and import related flows were ordinary through the day, there was panic selling of greenbacks by exporters towards evening as the rupee continued its upward trend, dealers said.

The near term outlook for the rupee continues to be that of appreciation, given the steady spate of inflows and the dollars weak trend against international currency majors." The next support level for the home currency will be at 44.50 level, which is likely to reached soon," said a senior dealer at a private sector bank

Meanwhile, in the forwards market, premia moved upward as exporters began hedging their exposures on back of the appreciating trend of the domestic currency, dealer said.

The six-month annualised forward premium closed at 0.93 per cent up 34 basis points from the previous close at 0.59 per cent. Twelve month annualised premia closed at 0.77 per cent (0.67 per cent).

Prices of Government securities closed nearly 15 paise higher after trading in a narrow band throughout the day.

Apprehensions regarding the auction scheduled in the beginning of December is also weighing on the minds of market participants dampening buying of gilts, they added.

The benchmark 7.38 per cent 2015 paper closed at Rs 101.35 at a yield of 7.20 per cent, after it had fallen to Rs 101.15 during the day. The 7.55 per cent 2010 paper closed at Rs 103.26, 16 paise higher than previous finish.

Towards the end of trading hours news of fiscal deficit of for April to October being less than half of the full year target improved sentiment. Buying of G-Secs by a large State-owned insurance company also helped the marginal rise in prices.

Meanwhile, call rates stabilised at 4.75-4.80 per cent levels. Under the LAF window, RBI accepted all 22 bids received worth Rs 5,605 croe in the one day reverse repo auction.

In the CBLO market, Rs 6,322.80 crore worth of trades were transacted, in the rate range of 4.65-5 per cent, being 142 in number.