The Hindu Business Line : Rupee recovers; longs see demand

MUMBAI: The rupee recovered its losses against the dollar on Tuesday, tracking gains of the euro. Strong foreign institutional investor inflows (FII) also facilitated the gain.

The domestic currency opened firm at 45.85/86, up from Monday's close at 45.96/97. It then fell to 45.93 but closed the day stronger at 45.89.

However, month-end demand from importers prevented the rupee from sustaining its gains, said dealers.

In the forward premia market, the 6-month closed at 0.7 per cent (0.6) and the 12- month at 0.58 per cent (0.5).

In the bond market, prices opened higher than Monday's closing. However, the prices of short-term papers remained flat. A dealer at a private bank said that insurance companies and provident funds were buying long-term papers, which caused these securities to rise.

"There is ample liquidity in the system right now and the US yields have also eased to 4.39 per cent. However, the Rs 8,000-crore auction next week is dampening sentiment," said a dealer.

The 7.49 per cent-12 year-2017 paper opened at Rs 102.20 (7.20 per cent YTM) and closed at Rs102.21 (7.20 per cent YTM), up from Monday's Rs 102.11 (7.21 per cent YTM).

The 7.40 per cent - 20 year - 2035 paper opened at Rs 98.40 (7.53 per cent YTM) and closed at Rs 98.46 (7.53 per cent YTM).

The call rate was unchanged between 5.25 per cent and 5.30 per cent. In the first one-day reverse repo auction, under the Liquidity Adjustment Facility, RBI received and accepted 14 bids for Rs 4,975 crore. The second auction saw 6 trades amounting to Rs 570 crore. In the CBLO market, there were 222 trades for Rs 11,798.35 crore in the range of 5.12 - 5.35 per cent.

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