The Hindu Business Line : Rupee range-bound; bond prices drop

MUMBAI: The rupee was range-bound against the dollar on Wednesday due to month-end demand and overall strengthening of the greenback. The rupee opened at 45.93/94 and closed 45.92, slightly lower than Tuesday's close of 45.89.

Though there was month-end demand for the dollar, there was also a lot of supply. A couple of State-run banks were seen selling dollars.

However, it was on behalf of their customers and not at the insistence of the central bank, said a dealer with a private bank.

The forward premia shot up with the six-month premium closing at 0.79 per cent (0.7 per cent) and the one-year at 0.64 per cent (0.58 per cent). Dealers said there was a lot of covering in the premia, probably driven by concerns that rupee may weaken further.

The rupee is right now in the consolidation phase and is trading in the broad range of 45.70-46.

Bond prices fell due to lack of buying support and on fears of liquidity tightening, said dealers.

The GDP for the July-September quarter was above expectations at 8 per cent. This too had a negative impact on bond prices, as this indicates that there is more demand for money, and consequently, less appetite for the Government papers, said a dealer with a private bank.

The 7.49 per cent-12 year-2017 paper opened at Rs 102.20 (7.2 per cent YTM) and ended trade at Rs 102.06 (7.22 per cent YTM), against Tuesday's close of Rs 102.21 (7.20 per cent YTM). The 7.37 paper opened at Rs 102.5 (6.97 per cent YTM) and closed at Rs 102.40 (6.98 per cent YTM).

Call rates were between 5.35-5.40 per cent (5.25-5.3 per cent). In the first one-day reverse repo auction, under the liquidity adjustment facility, the RBI received and accepted seven bids for Rs 1,195 crore. The second auction saw eight trades amounting to Rs 1,760 crore.

In the CBLO market, there were 254 trades for Rs 9,985 crore in the range of 5.24 - 5.4 per cent.

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