The Hindu Business Line : Rupee weakens, bond prices rise

MUMBAI: The rupee weakened against the greenback on dollar buying on Wednesday. A widening gap in the US trade deficit figures with exports showing a robust growth also helped the dollar to strengthen.

Having opened at 43.71, the rupee ended at its intra-day high of 43.75/7525, against Tuesday's close of 43.72/73.

In the forward premia market, the six-month premium closed at 1.78 per cent (1.71 per cent) and the 12-month premium closed at 1.47 per cent (1.44 per cent).

Bond prices rose marginally as news of a possible delay in the domestic fuel hike filtered in. Dealers said that a reading of the Federal Open Market Committee minutes revealed that the hike in interest rate might not be aggressive. However, they were quick to caution that while the interest rate hike might be measured, there could be no ceiling. The US treasury also rose by 15 basis points.

The market saw volumes of Rs 2,900 crore of which the 10-year 2015 benchmark accounted for only Rs 25 crore.

The 7.38 per cent 10-year benchmark 2015 government paper closed at 102.82, against Tuesday's close at Rs 102.74/75. The new 6.85 per cent 7-year 2012 paper was more actively traded. After opening at Rs 100.04 (6.85 YTM), it closed at 99.7050 (6.90 YTM).

Primary dealers were the major sellers as they usually lighten their books ahead of the auction, which is due next week. The inter-bank call rate remained unchanged at 4.75 per cent. The CBLO market saw 172 trades aggregating Rs 6,887.35 crore. This was put through in the rate range of 4.60-4.80 per cent.In the one-day reverse repo under the Liquidity Adjustment Facility, the RBI received and accepted 46 bids amounting to Rs 32,935 crore.

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