The Hindu Business Line : Rupee in tight range; gilts up

MUMBAI: The domestic currency ended weaker by about four paise at 46.3050/3150 per dollar on Tuesday. Volumes in the inter-bank forex market were nearly one-third the normal volumes owing to the bank employees' strike, dealers said. The rupee had closed at 46.26/27 on Monday.

The rupee remained in a tight range of 46.27-46.32 with some demand for greenbacks seen from oil importers and a few corporates, dealers said. Although demand for dollars was not substantial, it led to the rupee's weakening as the volumes were thin, they said.

The forwards market remained range-bound too, dealers said. The six-month forward closed at 2.68 per cent (2.70 per cent) while the twelve-month forward ended at 2.35 per cent (2.29 per cent).

Bond prices moved up for the second consecutive trading session; they closed nearly 70-80 paise higher.

The 10-year benchmark 7.37 per cent 2014 paper rose 70 paise during the day to end at Rs 107.85 at a yield to maturity of 6.28 per cent. The 11-year benchmark 7.38 per cent 2015 paper rose from morning levels of Rs 107.60 to finish at Rs 107.90.

Improved sentiment on the back of perception of the inflation having peaked at about 8 per cent helped the market pick up in addition to the absence of negative factors in the bond market at present, dealers said.

The Government's assurance to bring inflation under control through fiscal and monetary measures improved sentiment. Certain players said upgrading of India's long term foreign currency rating has had a positive effect on prices.

Call rates were in the range of 3.50-4.50 per cent. Under the LAF window, the RBI received 36 bids worth Rs 17,905 crore in the 1-day repo, while it received 8 bids worth Rs 1,850 crore in the 7-day repo. All bids were fully accepted by the central bank. In the CBLO market, 62 trades worth Rs 1,234.75 crore were conducted at rates in range of 1.00 - 4.50 per cent.