The Hindu Business Line : Rupee sheds 58 paise; securities buoyant

MUMBAI: The rupee depreciated sharply on Friday to close at 44.79/80 per dollar, 58 paise weaker than its previous close. The domestic currency had finished at 44.21/22 on Thursday.

"It was one-way downward movement for the rupee today, after it opened with nearly a 13 paise gap in the morning," said a dealer at a private sector bank.

Huge demand for the greenbacks came from banks and corporates, which were covering short dollar positions. Appreciation of the US currency against other international currency majors such as the pound streling and the euro also aided the home currency's downward slide, dealers said.

"A large corporate in the infrastructure business also had huge greenback demand today," said a dealer.

Although PSBs came in to sell dollars in some amount, perhaps at the behest of the central bank, it did not stem the rupee's southward movement," said a trader.

Meanwhile, forward premia went up to higher levels as the six-month forward finished at 1.61 per cent (1.45 per cent) and the twelve-month forward ended at 1.29 per cent (1.12 per cent).

Bond prices staged a smart recovery as the Finance Minister eased concerns on inflation by stating, "the worst was over". Prices of gilts went up nearly 70 paise in certain maturities.

Expectations of a likely cut in oil prices, in addition to comfortable liquidity conditions, added to the bullish sentiment prevailing in the domestic bond market, dealers said.

Yield on the benchmark 7.38 per cent 2015 paper fell by 11 basis points from its previous close to 6.61 per cent, as its price ended at Rs 105.82. The actively traded 7.55 per cent 2010 paper went up by nearly 45 paise from previous closing level at Rs 105.52, the yield tumbling 9 basis points to 6.34 per cent.

Although the prices had fallen in the afternoon on strong industrial output data they recovered later, dealers said.

Call rates remained comfortable, in the range of 4-4.75 per cent, amid ample liquidity in the system. Under the LAF window, RBI accepted all 45 bids aggregating Rs 15,820 crore. In the CBLO market, 134 trades worth Rs 4,159.10 crore were transacted.