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

MUMBAI: The rupee was range-bound and ended marginally lower against the US dollar on Wednesday as the central bank was seen buying dollars, said dealers. The Indian currency moved in the narrow range of 44.23-44.25.

On Wednesday, the rupee opened at 44.23/24 and ended at 44.25 against Tuesday's close of 44.26.

With the Real Effective Exchange Rate close to 10 per cent, the RBI does not seem comfortable with the rupee appreciating, the chief forex dealer of a private bank said.

The forward premia shot up, with the six-month premium closing at 2.37 per cent (2.3 per cent) and the one-year premium closing at 1.86 per cent (1.75 per cent). "This is a reflection of tightness in the local market," the dealer said.

Bond prices declined, as there is no fresh buying ahead of the Rs 5,000-crore auction. "The government papers that were auctioned earlier are quoting below the cut-off price, due to which dealers are not able to sell them. That is why there is no fresh buying," said a bond dealer.

The 8.07 per cent 11 year-2017 paper opened and closed at the same level of Rs 105.25 (7.36 per cent YTM), slightly lower than Tuesday's close of Rs 105.27 (7.36 per cent YTM). But it touched a high of Rs 105.37 and a low of Rs 105.02 during the day. The 9.39 per cent 5 year-2011 paper also opened and closed at the same level of Rs 110.45 (7.02 per cent YTM). During day trade, it touched a low of Rs 110.3.

Liquidity remained a concern as call rates continued to be around 7-7.25 per cent (7-7.1 per cent).

In the first one-day auction, the RBI did not receive any bids in the repo auction, but received and accepted 34 bids for 17,520 crore in the reverse repo. In the second auction, it received and accepted four bids for Rs 505 crore and four bids for Rs 1,575 crore.

In the CBLO market, there were 332 trades for Rs 20,808.75 crore in the 5.85-6.52 per cent.