The Hindu Business Line : Rupee gains; bonds flat

MUMBAI: The rupee substantially appreciated against the greenback on Thursday on the back of inflows as well as negative dollar sentiment. Call rates continued to be above 7 per cent as liquidity remained tight.

The domestic currency opened at 44.22 and was range-bound between 44.11 and 44.20. It, however, appreciated to close at 44.1350/14, up from Tuesday's close at 44.30.

Dealers said dollar inflows in the market caused the rupee to appreciate. The domestic currency was also tracking the gains made by other major currencies against the dollar, especially the yen. There was a decent amount of selling by a foreign bank, they said.

The forward premia moved up sharply with the 6-month closing at 2.3 per cent (1.78 per cent) and the 12-month ending trade at 1.48 per cent (1.37 per cent).

Bond prices continued to be flat due to tight liquidity. The Reserve Bank of India lent over Rs 27,000 crore to banks through the repo auction on Thursday.

According to market participants, this could be a move by the central bank to keep short-term rates high and thereby inflation under control. Volumes in the G-sec market were less due to the lack of trading interest, dealers said.

The 9.39 5-year 2011 paper opened at Rs 112.2050 (6.69 per cent YTM) and closed at Rs 112.20 (6.69 YTM), which was the same as the previous close. The 10.25 15-year 2021 paper opened at Rs 126.53 (7.34 per cent YTM) and closed at Rs 126.5325 (7.34 per cent YTM).

The call rate opened at 7 per cent, touched 7.5 per cent at spikes and closed at 7-7.25 per cent (7.2 per cent).

In the first one-day repo auction, the Reserve Bank of India received one bid for Rs 20 crore in the reverse repo auction and 37 bids for Rs 20,630 crore. In the second two-day reverse repo auction, it received three bids for Rs 825 crore and 17 bids for Rs 7,585 crore in the repo auction.

In the CBLO market, there were 293 trades for Rs 12,342.10 crore in the rate range of 6.25-6.5 per cent (5.3-6.45).