Financial Daily from THE HINDU group of publications
Wednesday, Oct 26, 2005
Financial Daily from THE HINDU group of publications Wednesday, Oct 26, 2005 |
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Money & Banking
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Forex Rupee recovers; bond prices rise Our Bureau
MUMBAI: The rupee appreciated against the dollar on Tuesday, in tandem with a rise in the euro and the domestic hike in key interest rates. The rupee opened at 45.12/13 and weakened by 3 paise immediately after the announcement of the hike by RBI. The domestic currency, however, inched up during the day to close at 45.06/07, up from Monday's 45.16/17. A dealer at a private bank said the quarter percentage hike in the repo and reverse repo rate was perceived to be in favour of the rupee. "The hike was in line with market expectations," he said. Dealers said that the tone of the policy was towards curbing higher inflation and a strong domestic currency would aid the process. In the forward market, the 12-month premium closed at 0.51 per cent (0.49) and the six-month at 0.56 per cent (0.5). In the bond market, prices rose by 20 paise before the announcement of the hike in the credit policy. The announcement of a rise in the short-term key interest rates, however, caused a fall of 15 paise as a knee-jerk reaction. Mr Sampath Kumar, Head, Treasury, IndusInd Bank, said the hike in short term key interest rates seemed more to rein in inflation rather than a signal of a long term hardening of rates. The 7.37-9 year-2014 paper opened at Rs 102.38 (6.99 per cent YTM) and closed at Rs 102.47 (6.98 per cent YTM), up from Monday's Rs 102.38 (6.99 per cent YTM). The 10.25 per cent - 16 year- 2021 paper opened at Rs 125.40 (7.46 per cent YTM) and closed at Rs 125.53 (7.45 per cent YTM), higher than Monday's close at Rs 125.41 (7.46 per cent YTM). The 7.38 per cent-10 year-2015 benchmark paper was dealt at Rs 102.10 (7.08 per cent YTM), 15 paise higher than Monday's Rs 101.95 (7.099 per cent YTM). The call rate closed at 5.25 per cent (5-5.05) in anticipation of higher rates on Wednesday. In the one-day reverse repo, under the liquidity adjustment facility, RBI received and accepted 24 bids amounting to Rs 12,215 crore. In the CBLO market, there were 314 trades for Rs 12,891.20 crore in the rate range of 5-5.25 per cent.
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