The Hindu Business Line : Rupee stronger; gilt prices up

MUMBAI: The rupee moved up to end on a stronger note on Thursday as the US currency lost ground overseas against the euro and other major international currencies.

The domestic currency ended at 43.7650/7750 against the dollar, seven paise above the previous close of 43.83/85.

In the morning trading hours, as Euro gained strength, banks and exporters sold greenbacks taking the rupee to 43.80 levels. Dealers said good amount of oil import related buying of dollars was also seen. This stemmed the home currency's upturn to the anticipated 43.75 level.

Foreign investment and non-deliverable forwards related greenback supplies commenced towards afternoon, driving the rupee upwards.

Annualised forward premia dipped as the six-month forward premium closed at 1.61 per cent (1.94 per cent) while the one-year forward premium finished at 1.26 per cent (1.48 per cent).

Gilt prices ended nearly 60 paise higher as purchases of government securities continued on expectation of lower inflation. The inflation figure is expected to drop to 6.95 per cent from the previous week's 7.02 per cent, dealers said.

Positive sentiment was also reinforced by a Government surplus of Rs 40,000 crore with the central bank giving rise to anticipation of cancellation of g-sec auction in the first week of January.

The benchmark 7.38 per cent 2015 paper closed at Rs 106.22; yield on the paper fell to 6.55 per cent, 9 basis points lower than the previous close. The 7.55 per cent 2010 paper finished at Rs 105.40 with the yield at 6.35 per cent, 6 basis points lower than the previous finish.

Overnight call rates in the inter-bank market eased to trade in a range of 4.5-6 per cent. Under LAF window, the RBI accepted all seven bids worth Rs 2,020 crore in the one-day reverse repo auction. In the one-day repo auction, four bids worth Rs 665 crore were accepted. In the CBLO market, 156 trades aggregating Rs 5,400 crore were transacted.