The Hindu Business Line : Re strengthens; gilts weak

Mumbai: THE rupee gained strength on Wednesday to close at 48.1250/1300 against the dollar as compared to Tuesday's close of 48.1375/1425 in the forex market.

There was good supply of the dollars, which helped the rupee to strengthen. However, the appreciation was controlled by mopping up of the greenback by state-run banks, at the behest of the central bank, said a forex dealer.

The rupee opened at 48.1325/1375, touched an intra-day high of 48.1200 and an intra-day low of 48.1550 against the dollar.

In the forwards market, the premia were seen firming due to the RBI intervention.

The RBI interventions have become quite frequent in the forwards market, contend dealers. In an attempt to firm up the forwards, protect exporters and also delay absorption of dollars into the country's forex reserves, the central bank asks state-run banks to purchase forwards, explained the treasury head of a public sector bank.

The six months premium ended at 3.80 per cent (3.70 per cent) and the one-year at 3.53 per cent (3.46 per cent).

G-sec prices were seen marginally falling on Wednesday on back of `bouts of profit-booking'.

Profit-booking combined with a higher than expected cut-off yield for the 91-day T-bill auction, saw yields firm up a little, said the chief dealer in a primary dealer.

The 10-year benchmark 7.40 per cent 2012 paper opened at Rs 107.52/53 and closed at Rs 107.45 at a yield of 6.33 per cent.

On the longer end, the 8.07 per cent 2017 paper opened at Rs 113.60/63 and closed lower at Rs 113.54/58 at a yield of 6.58 per cent.

In the inter-bank call money market, the call rates closed a little higher at 5.50-5.75 per cent.

A little tightness was experienced due to the advanced tax outflow and also the new call money lending and borrowing restrictions, effective December 14.

In the one-day repo market, the RBI received 9 bids worth over Rs 7,000 crore, all of which was accepted at the repo rate of 5.50 per cent.

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