The Hindu Business Line : Rupee lacklustre; bond prices rally

MUMBAI: The rupee was lacklustre against the US dollar on Monday, the first trading day of the New Year as there were not many market participants.

There was no trading interest as market participants were merely covering their positions, said dealers.

The rupee opened at 45.09/10 and moved between 45.12 and 45.04 before ending trade at 45.08/09, slightly lower than Friday's closing of 45.04/05.

This week the rupee is likely to trade between 45 and 45.25. The market could see more action after one week, as demand for cash-dollar starts to come in from oil companies, said a dealer with a private bank.

The forward premia saw some profit-taking at lower levels, said dealers. The six-month premium closed at 1.1 per cent (1 per cent) and the one-year at 1.17 per cent (1.35 per cent).

In the bond market, prices rallied by around 20 paise on signs of improved liquidity in the system.

Dealers said traders came into the market as liquidity showed improvement. Banks were borrowing from the central bank at 6.25 per cent and lending to each other at higher call rates.

Dealers also said that around Rs 10,000 crore through the special deposit scheme and Rs 8,000 crore from salary disbursements had entered the system.

A dealer at a private bank said that foreign banks, which were lying low for the last couple of weeks on account of the closing of the financial year, were also trading in the market.

The 8.07-12-year 2017 paper opened at Rs 106.54 (7.20 per cent YTM) and ended at Rs106.74 (7.17 per cent YTM) up from Thursday's close at Rs 106.58 (7.19 per cent YTM).

The 10.25-16-year 2021 paper opened at Rs 126.35 (7.36 per cent YTM) and closed at Rs 126.58 (7.34 per cent YTM), substantially higher than Thursday's Rs 126.39 (7.36 per cent YTM).

The call rate closed at 6.25 per cent (7) but touched 7 per cent during the day.

In the first one-day reverse repo auction, the RBI received one bid for Rs 500 crore and 22 bids for Rs 15,650 crore. In the second one-day reverse-repo auction, the RBI received four bids for Rs 3,470 crore and two bids for Rs 120 crore. In the CBLO market, there were 378 trades for Rs 14,589.20 crore in the range of 5.35-6.60 per cent.