The Hindu Business Line : Rupee closes a tad weak; gilt prices up

MUMBAI: The rupee ended marginally weaker on Wednesday at 43.83/85 per dollar after trading in a narrow range throughout the day. The previous finish of the domestic currency was at 43.80/81 per dollar.

"With the Euro moving both ways, the home currency was reflecting movements of the international currency markets," said a dealer at a state-owned bank.

Itstrengthened intra-day to 43.8250 per dollar but was dealt at the lowest level at 43.8925 against the greenback.

Foreign exchange market was mainly driven by demand and supply of dollar from importers and exporters, as FII inflows had also slowed down, dealers said.

The rupee was likely to trade in a narrow range and follow the movements of international currency majors in the next trading session, said a dealer.

Forwards were range bound as the six-month forward ended lower at 1.94 per cent (2.07 per cent), while the one-year forward finished at 1.48 per cent (1.51 per cent).

Prices of gilts moved up by about 40 paise in papers of certain maturities on expectation of cancellation of the Rs 7,000 crore auction, due in early January, dealers said.

With inflation worries easing and reduced borrowings by the Government, positive sentiment continued to prevail. The benchmark 7.38 per cent 2015 paper ended at Rs 105.75 and its yield finished at 6.62 per cent after it had dipped to 6.6 per cent during the day.

The 7.55 per cent 2010 paper closed at Rs 105.15, with yield at 6.41 per cent after it had dropped to 6.38 per cent intra-day.

At the Rs 2,000 crore 91-day treasury bill auction, the cut off yield was set higher at 5.49 per cent (5.4 per cent), while at the Rs 1,000 crore 364 day t-bill auction it was set at 5.74 per cent — 9 basis points over the previous cut-off of 5.65 per cent.

Call rates in the inter-bank market were in a range of 5.75 to 6.1 per cent, easing off towards the end of the day, dealers said.

In the one-day reverse repo auction, the RBI accepted all four bids worth Rs 365 crore. In the one-day repo auction, it injected Rs 7,920 crore in the system by way of 12 bids. The CBLO market saw 130 trades aggregating Rs 5,600 crore being transacted.