The Hindu Business Line : Rupee hits 46.47; bond yields soar

MUMBAI: The rupee fell to its lowest levels in over a year on Thursday to close at 46.47/48 against the dollar. The bond yields soared, with the ten-year benchmark touching 6.28 per cent - the highest since March 2003. Domestic as well as global concerns had plagued the markets, said market participants.

Spurred by intense dollar demand from oil corporates and offshore demand for non-deliverable forwards market, the rupee weakened substantially from the opening at 46.30 against the dollar to close at 46.47/48 - a thirteen-month low, which was last witnessed on June 30, 2003, said dealers.

"The US currency has strengthened against other major currenciesSoaring oil prices have spurred fears of rising dollar demand for import payments," said a senior dealer.

Bond prices crashed by about one and a half rupee with the yield on the ten-year benchmark rising to 6.28 per cent - a 17-basis point rise from Wednesday's levels. The 11-year benchmark plummeted to Rs 107.75 lower by over a rupee.

"High oil prices, the expected hardening of interest rates and the inflation expected to ascend higher, are major dampeners for the market. Participants are waiting for a constructive signal from the central bank for the debt market," said Mr K. P. Suresh Prabhu, Vice-President, Treasury, HDFC Bank.

The forward premia closed higher with the six month ending at 2.76 per cent (2.50 per cent), while the twelve-month closed at 2.08 per cent (1.96 per cent). Call rates in the inter-bank market were within 4.25-4.50 per cent. Under the liquidity adjustment facility (LAF) window, RBI received and accepted 38 bids worth Rs 6,455 crore.