The Hindu Business Line : Rupee declines; securities weak

MUMBAI: The rupee ended at 43.5850 against the dollar on Tuesday, a shade lower than Monday's close of 43.56, as banks squared up positions, dealers said.

The rupee opened at 43.57/58. It touched 43.5450 levels during intra-day trade as banks sold dollars to book profits, said dealers. Thereafter, there was some dollar buying.

A dealer at a private broking house said, "Many banks sold dollars to book profits and bought forwards."

The forward premia market moved up slightly with the 6-month premium closing at 1.50 per cent (1.47 per cent) and the 12-month premium closing at 1.35 per cent (1.30 per cent).

Bond prices fell by around five basis points or by 30 paise on worries of oil price rise, inflation and liquidity shortage. The 7.38 per cent 10-year benchmark paper closed at Rs 106.04 (6.57 per cent YTM) against Monday's close of Rs 106.

The 10-year benchmark paper had opened at Rs 105.70 (6.61 per cent). A head dealer at a private bank said, "Reasons for the fall were several. One was the oil price, which crossed $55 a barrel. So, the market mood was negative. There was not much buying because the market is expecting yields to come down."

Inflation worries, due to rising steel and cement prices, also lead to the fall in bond prices, the dealer said. Another worry for the market is that advance tax outflows may cause liquidity crunch, he said.

The inter-bank call rates remained between 4.5 per cent and 5 per cent.

In the one-day reverse repo under the Liquidity Adjustment Facility, RBI received 53 bids amounting to Rs 38,060 crore. In the CBLO (Collaterised Borrowing and Lending Obligations) market, 174 trades aggregating Rs 5069.25 crore was put through in the rate range of 2 to 4.80 per cent.

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