The Hindu Business Line : Bond prices plunge; rupee tad weaker

MUMBAI: The rupee ended at 43.73 against the US dollar on Tuesday, down from its Monday close of 43.68, due to buying by state-run banks, said dealer.

The rupee had opened unchanged on Tuesday, at 43.68. A dealer at a private bank said that initially there was quite a bit of buying, mostly by state-run banks. Though there was a sell off during intra-day trade, by close, there was buying again.

The rise in crude oil price was another reason for the fall in the rupee, as it led to panic buying by corporates and oil companies, the dealer added.

The forward premia market also fell with the 12-month premium closing at 1.04 (1.46 per cent) and the 6-month premium closing at 1.60 per cent (1.68 per cent). The bond market saw a virtual bloodshed with the prices of the 7.38 per cent 10-year benchmark paper falling. It ended on Tuesday at Rs 105.60 (6.63 per cent YTM), lower than Monday's close of Rs 106.25/30 (6.55/54 per cent). Dealers said prices fell on higher than expected government borrowings and an increase in the US yield data. The benchmark paper, which was trading at Rs 107 levels pre-budget, has lost around Rs 1.50. Dealers said that it may fall by another 50 paise unless there is some positive action, like reduction in oil price or a statement from the Finance Minister.

The call rates moved in the range of 4.50 to 4.75 per cent (4.60 to 4.75 per cent). In the one-day repo/reverse repo auctions, RBI received and accepted 50 bids worth Rs 40,600 crore.

In the CBLO market, 148 trades aggregating Rs 5382.40 crore was put through in the rate range of 3.05 to 4.75.

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