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Friday, May 10, 2002

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Forex market stays dull

Mumbai:THE rupee closed at 48.96/9675 against the dollar as against the previous close at 48.9450/9550 in a dull forex market on Thursday. The rupee opened at 48.96/97. The market is seeing low volumes of trade as there are no fresh factors to trigger a movement in the rupee, according to forex dealers.

However, dealers said that the currency might weaken over the next week as there are concerns emerging again on the oil prices front.

"As of today the importer demand is slack and dollar supplies in the market are steady. These supplies are mopped up by the nationalised banks, keeping the currency rangebound'', said a dealer.

Meanwhile, forwards eased slightly with the six month premium ending at 5.92 per cent (5.95 per cent) and the premium for one year ending at 5.52 per cent (5.56 per cent).

Bonds ended lower as expectations of higher yields at next week's bond auctions and selling by cooperative banks turned market sentiment down, dealers said Thursday. The market is likely to bid for higher-than-current-market yields at the 20-year bond auction and this could cause selling pressure in existing bonds, they said.

The RBI Governor, Mr Bimal Jalan's Thursday comment that the bank didn't have any time frame to cut the bank rate was construed to mean that the RBI wasn't in any hurry to cut the rate.

Bonds are expected to open lower Friday although the system receives around INR30 billion on the redemption of the 11% 2002 bond.

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