The Hindu Business Line : Rupee rises further; bond prices edge up

MUMBAI: The rupee substantially rose against the dollar on Thursday, gaining 30 paise on the back of foreign institutional investor inflows and in tandem with a global rally in major currencies. In the last two days, the rupee has gained nearly 70 paise.

The domestic currency opened at 45.65 and rose to touch an intra-day high of 45.37. It closed the day at 45.42, up from Wednesday's 45.73/74.

Dealers said that rumours of the $500-million inflow from the sale of stake in DSP Merrill Lynch caused major dollar selling in the forex market. Dealers also said the unwinding of long positions with respect to the dollar in the non-deliverable forward market also aided in the home currency's gains.

In the forward premia market, the six- month closed at 0.85 per cent (0.76) and the 12-month at 0.70 per cent (0.65). Profit-taking also pushed up the premia in the forward market.

In the bond market, prices rose slightly during the day. "In spite of the liquidity crunch and the higher call rate, bond prices closed higher than Wednesday's close. The 8.07- 12 year-2017 paper opened at Rs 106.52 (7.20 per cent YTM), touched an intra-day high of Rs106.57 and closed at Rs 106.51 (7.20 per cent). On Wednesday it had closed at Rs 106.45 (7.21 per cent YTM).

The 10.25 - 16 year-2021 paper opened at Rs 126.32 (7.37 per cent YTM) and closed at the same level, up from Wednesday's Rs 126.25 (7.375 per cent YTM).

The call rate closed at 6-6.05 per cent (6), touching an intra-day high of 6.25 per cent. In the first one-day reverse repo auction, the Reserve Bank of India received and accepted three bids amounting to Rs 545 crore. In the second auction, it received and accepted three bids for Rs 5,205 crore. In the CBLO market, there were 309 trades for Rs 12,421.30 crore in the range of 6-6.25 per cent.