The Hindu Business Line : Rupee moves up; bonds improve

MUMBAI: The rupee closed stronger by 15 paise on Tuesday as the dollar lost ground overseas against the euro and other currencies. The rupee ended at 43.70/72 against the dollar as compared to its previous close of 43.8450/8550.

The domestic currency opened with a positive gap at 43.75 per dollar after the euro had appreciated overnight in the international markets. Dealers said substantial dollar supplies from exporters and foreign institutional investors led the rupee to strengthen through the day.

Month-end oil payment-related dollar demand was lower than usual and it was also aiding the rupee's rise, said a dealer at a private sector bank.

Annualised forward premia moved northward as the six month forward ended at 1.90 per cent (1.77 per cent) while the one-year forward closed at 1.36 per cent (1.32 per cent).

Bond prices of longer tenor papers went up by about Rs 1.50 while medium term papers moved up by 50 paise.

Liquidity conditions are also likely to improve with special deposit money pouring in bonds and public sector companies also investing in gilts, dealers said.

The rally was also supported by oil prices falling and anticipation of government securities auction cancellation scheduled for the first week of January.

The 7.38 per cent 2015 paper closed at Rs 106.63 at a yield of 6.51 per cent, five basis points lower than previous close. The 7.55 per cent 2010 paper closed at a yield of 6.32 per cent at Rs 105.59.

Call rates in the inter-bank market were in the range of 5.90-6 per cent. In the one-day repo auction RBI accepted all three bids aggregating Rs 450 crore while in the one-day reverse repo auction all three bids worth Rs 210 crore were accepted. In the CBLO market, 145 trades aggregating Rs 5,700 were transacted.