The Hindu Business Line : Rupee lower against dollar, bond prices gain

MUMBAI: The rupee lost against the US dollar on Thursday following the statement by the US Federal Reserve chairman, Mr Ben Bernanke, that US interest rates may rise again. The rupee opened at 44.31/32 and moved in the range of 44.27/28 and 44.35/36 before ending trade at 44.34/35, about 10 paise lower than the previous close of 44.25.

"Considering that oil and commodity prices have come down, the rupee should not have depreciated. But the statement of the Fed chairman has caused a fear that inflows into India could slow down a bit," said a dealer.

In the forward premia market, the six-month premium closed at 2.24 per cent (2.37 per cent) and the one-year ended at 1.85 per cent (1.86 per cent). "The rupee is likely to lose ground as it is overvalued. I see the rupee touching 45 by the end of this month," said the dealer.

The bond market saw hectic activity as it reacted to the statement by the Finance Minister, Mr P. Chidambaram. that the auction of Rs 5,000 crore may be postponed. Immediately after this statement the volumes in the market increased and bond prices shot up. However, prices fell as the statement was later modified to the effect that the Government was yet to take a final decision on the auction, said dealers. However, at the end of trade, prices were up by around 12 paise from the previous close.

The 8.07 per cent 11 year-2017 paper opened at Rs 105.25 (7.36 per cent YTM) and ended trade at Rs 105.47 (7.33 per cent), higher than the previous close of Rs 105.25 (7.36 per cent YTM). During the day it touched a high of Rs 105.63 and a low of Rs 105.21. The 7.4 29-year 2035 paper opened at Rs 97.5 and ended at Rs 97.69 (7.59 per cent YTM). During the day it moved between Rs 97.9 and Rs 97.4.

In the first one-day auction, the Reserve Bank of India did not receive any bids in the repo auction, but received and accepted 19 bids for Rs 8,275 crore in the reverse repo. In the second auction, it received and accepted three bids for Rs 165 crore and 10 bids for Rs 2,055 crore.

Call rates closed around 6.75-6.9 per cent (7-7.25 per cent). In the CBLO market, there were 373 trades for Rs 22,336.1 crore at 6.22-6.7 per cent.