The Hindu Business Line : Rupee strengthens; bond prices rise

MUMBAI: The rupee gained against the greenback on Thursday on the back of dollar inflows. It opened at 45.20/22 and touched an intra-day low of 45.25. It, however, appreciated to close the day at 45.12/14, up from Tuesday's close at 45.26.

Dealers said the rupee was under slight pressure earlier in the day "Due to the overseas holiday season, the only factor that is driving the rupee is dollar inflows. The only reason the rupee weakened on Wednesday was the RBI intervention in terms of purchase of dollars," said a dealer at a private bank.

In the forward premium market, the six-month closed at 1.45 per cent (1.53) and the 12-month ended at 1 per cent (1.03). In the bond market, prices rose slightly during the day, since concerns regarding a crunch in liquidity had been discounted.

A dealer at a private bank said that if the central bank were to infuse liquidity into the system, inflation-related worries could ease. The 8.07- 12-year 2017 paper opened at Rs 106.47 (7.21 per cent yield to maturity) and ended at Rs 106.55 (7.20 per cent YTM), higher than Tuesday's close at Rs 106.45 (7.21 per cent YTM). The 10.25 16-year 2021 paper opened at Rs 126.32 (7.36 per cent YTM) and closed at Rs 126.36 (7.36 per cent YTM), up from Tuesday's Rs 126.25 (7.37 per cent YTM).

The call rate closed at 6.90 (6.50-6.75 per cent) but touched an intra-day high of 7.25 per cent. In the one-day reverse repo auction, RBI accepted three bids for Rs 900 crore, and in the repo auction, it accepted 36 bids for Rs 22,165 crore.

In the second auction, RBI received two bids for Rs 1,115 crore in the reverse repo auction and 11 bids for Rs 4,520 crore in the repo auction.

In the CBLO market, there were 300 trades for Rs 9,641.50 crore in the range of 6.20-6.50 per cent.