Financial Daily from THE HINDU group of publications
Wednesday, Apr 14, 2004

Cross Currency

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Money & Banking - Forex

Rupee weakens; gilts decline

Our Bureau

MUMBAI: Driven down by demand for the greenback across the board, the domestic currency weakened to close at 43.79/80 against the dollar on Tuesday; around fifteen paise lower than Monday's 43.64/65.

Dealers said there was a sizable amount of dollar buying by nationalised banks who were mopping up greenbacks at RBI's behest. Corporates and importers too were buying dollars heavily to cover their short positions.

"Although there was some cash-dollar shortage today, the outlook for the rupee remains positive. Dollar inflows continue to flood the market," he said.

Meanwhile, in the forwards market some segments started trading at a discount. The six-month premium ended at - 0.11 per cent while the premium for one year ended at 0.06 per cent.

Bond prices slipped by around 12-15 paise across maturities in a lacklustre government securities market.

" There was some amount of profit-taking ahead of an auction announcement expected next week, which is why the ongoing rally of the past week has slowed down. But they are unlikely to impact as liquidity continues to be bountiful," said a dealer.

The 8.07 per cent 2017 paper opened at Rs 125.30/35 and got dealt up to Rs 125.20/22, while the 6.35 per cent 2020 opened at Rs 109 and fell to Rs 108.88/90.

Call rates remained at 4.25 per cent levels in the inter-bank market.

Under the LAF, in the seven-day fixed rate repo auction, the RBI received and accepted 48 bids amounting to Rs 29,310 crore at the rate of 4.50 per cent.

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