The Hindu Business Line : Rupee tad higher; bonds erase losses

MUMBAI: Supply of dollars by public sector banks and exporters helped stem the rupee's decline seen in the past three sessions. The currency finished at 46.00/02 a dollar on Wednesday.

The currency had closed at 46.1050/1150 against the dollar on Tuesday. "Oil-related demand pushed the rupee to the day's low of 46.2050 in the morning, from where it started to recover," said a trader at a Government bank.

According to dealers, half-yearly closing of accounts for banks on September 30 might lead to thin volumes in the forex market. They expect the rupee to soften to 45.95 levels as oil prices have come off high levels.

The forwards market followed the spot movement, albeit with a gap, traders said. The six-month forward closed lower at 2.04 per cent (2.30 per cent) while the twelve-month forward closed at 1.75 per cent (1.90 per cent).

Bond prices plunged by nearly a rupee on concerns over inflation spurred by high oil prices, but recovered by about 60 paise later in the day, dealers said.

Sentiment also improved as the Reserve Bank of India (RBI) said that Treasury Bills worth Rs 25,500 crore would be issued as part of a market stabilisation scheme; dated securities will be issued after considering the liquidity position.

The 10-year benchmark 7.37 per cent 2014 paper closed at a yield of 6.22 per cent before it shot up to 6.25 per cent during the day. The closing price of the paper was Rs 108.20, 15 paise lower than the previous close. The 7.38 per cent 2015 paper rose to a yield of 6.30 before ending lower at 6.25 per cent at a price of Rs 108.95.

Mismatches in the inter-bank call money market pushed rates to 4.75 per cent during the day; the rates eased to 4.25-4.50 per cent towards close.

Meanwhile, under LAF the RBI absorbed Rs 13,290 crore through 29 bids in the one-day repo and accepted all six bids worth Rs 1,295 crore in the seven-day repo.

In the CBLO market, 125 trades worth Rs 3,766.75 crore were transacted in the rate range of 4.90 to 1.00 per cent.