• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Our Bureau

Mumbai: THE rupee closed at another all-time low on Wednesday at 49.03/0350 to the dollar in a volatile forex market as against the previous close of 49.0050.

Forex dealers said that market was jittery following statements by the Prime Minister about a possible `retaliation' in response to the terrorist attacks on army camps in Jammu.

The rupee opened at 49 and strengthened to a high of 48.8850 in the morning, following dollar sales by foreign banks, which were selling greenbacks and buying rupees to meet their cash reserve requirements before reporting Friday.

At this point, the news of statements made by the PM filtered in and a bout of panic demand for dollars ensued taking the currency to an intra-day low of 49.0575. "State run banks started selling dollars again at this point to support the rupee, possibly at the behest of the RBI'', said a forex dealer.

Meanwhile, the six-month forward premium ended at 6 per cent (5.98 per cent), while the premium for one-year closed at 5.56 per cent (5.63 per cent).

Securities prices crashed by nearly Rs 2 on account of selling pressure on the statements made by the Prime Minister on a possible retaliation by India to militant attacks in J&K. Prices, however, recovered partly, but closed lower by nearly 70 paise to Re 1 from opening levels.

The yield on the most actively traded paper — the 11.50 per cent 2011 paper rose to around 7.86 per cent, but later recovered to 7.74 per cent. The paper, which had opened at Rs 125.80, fell to Rs 124.10, before rallying to close at around Rs 125.

The recently issued 7.55 per cent 2010 paper, which had opened at Rs 99.60, fell to Rs 98.50, before recovering to around Rs 98.95. The 11.03 per cent 2012 paper ended at Rs 122, after opening at Rs 122.60.

The paper had fallen to Rs 121.20 during the day.

Said one dealer in a nationalised bank, "The outlook looks quite bleak as call rates have been high for the past few days. The liquidity conditions are not as easy as before as food credit is picking up rapidly.''

He added that most banks have a threshold limit, which once breached, would trigger a spate of selling in the market.

Foreign banks are likely to start selling if the trend of rising yields continues, he said.

In the inter-bank call money market, the call rates closed at around 7.50-7.75 per cent, after hovering at these levels for most of the day.

The RBI did not receive any bids in the one-day repo auction and in the one-day reverse repo auction, the central bank received one bid, which it did not accept.

Send this article to Friends by E-Mail

Stories in this Section
Re down 3 paise; gilts fall

Copyright © 2002, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line