The Hindu Business Line : Rupee, bonds fall sharply

MUMBAI: Dragged down by a fall in the domestic equity markets and a hardening in international crude prices, the rupee plunged by around 30 paise, touching the 43.85 levels to a dollar on Wednesday.

The domestic currency closed the day at 43.83/84, as against Tuesday's closing levels of 43.54/55.

After opening weaker at 43.65/68, on account of an overnight rise in crude oil, it slipped to 43.85 on a bout of good dollar buying across the board.

"Custodial banks and corporates were all in the market buying dollars today. There was some speculative build-up and a bit of profit booking which influenced the rupee today. With the crash in the Sensex there was some talk of FII outflows also being a factor," said a dealer .

In the forwards market, the six-month premium ended higher at 1.96 per cent (1.78 per cent) while the premium for one year ended at 1.50 per cent (1.35 per cent). Almost in tandem with the fall in rupee value, bond prices too fell by around 60 paise across maturities. The 10-year benchmark paper ended at Rs 106.23 at a yield to maturity of 6.56, as against its previous closing at Rs 106.90 (6.47 per cent).

Call rates remained at the 4.80 per cent levels in the inter-bank market. In the one-day reverse repo under the LAF, the RBI received and accepted 52 bids, amounting to Rs 38,165 crore, at the rate of 4.75 per cent.

In the CBLO market, 107 trades were conducted, amounting to a volume of Rs 3,085.25 crore, in the rate range of 4.25 per cent and 6 per cent.

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