The Hindu Business Line : Rupee weakens; bonds steady

MUMBAI: The rupee ended weaker on Monday on substantial dollar demand from corporates related to month-end oil payments, dealers said. The currency closed at 43.8450/8550, six paise weaker than previous finish at 43.78/79.

Dealers said that most trades were done in the range of 43.8350-43.8500 per dollar in a thin volume market. Banks were also buying greenbacks to cover short dollar positions taken earlier. FII investments have slowed down these past few days leading to lesser dollar inflows, dealers said.

Forward premia moved upward as the six-month forward ended at 1.77 per cent (1.62 per cent) and the one-year forward premia finished at 1.32 per cent (1.28 per cent).

Prices of government securities opened weaker but moved up to close more or less at previous closing levels.

Anticipation that the government securities auction scheduled for January 1-8, 2005 is likely to be cancelled held prices at these levels, dealers said. Volumes in the bond market have dropped to Rs 1,000 crore -1,200 crore.

Market players are waiting for the auction calendar to be announced during this week, which will also state the amount to be borrowed under the MSS.

The benchmark 7.38 per cent 2015 paper closed at a yield of 6.55 per cent at a price of Rs 106.32 while the 7.55 per cent 2010 paper ended at 6.34 per cent yield at Rs 105.40.

Call rates in the inter-bank market were in a range of 5.75 - 6.00 per cent. Under the LAF window, the RBI accepted two bids worth Rs 220 crore in the one-day reverse repo auction. In the one-day repo auction, the RBI accepted two bids aggregating Rs 195 crore.

In the CBLO market, 141 trades worth Rs 5,000 crore were transacted.