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MUMBAI: The rupee gained on Friday due to good dollar inflows and reports on current account surplus for the January-March period. This helped the rupee close higher, though the market was reasonably quiet in the early part of the day, said dealers.

The rupee opened at 43.50/51 and closed at 43.4850 against Thursday's close of 43.5150.

The rupee is increasingly getting distanced from the movement of the US dollar, said a dealer with a private bank. "So, even if the REER is showing the rupee to be overvalued, it is not much of a concern."

The 12-month premium closed at 1.35 per cent (1.3 per cent) and the six-month at 1.54 per cent (1.48 per cent).

Bond prices fell after the Finance Minister, Mr P. Chidambaram's statement on Thursday reiterating that the Government would go ahead with the Rs 10,000-crore auction in the first week of July. Another reason for the fall in bond prices was the 25 basis point rate hike by the US Federal Reserve and indications of further hike.

Although inflation, at 4.10 per cent, was higher than expected, it was not much of a worry, as it was lower than the previous week's 4.33 per cent, a dealer said.

The 7.37 9-year 2014 paper ended trade at Rs 102.75/80 (6.94/95 per cent YTM) against Thursday's close of Rs 103.20 (6.87 per cent YTM).

The 7.38 per cent 10-year 2015 benchmark paper was dealt at Rs 103 (6.97 per cent YTM) against the earlier close of Rs 103.58 (6.88 per cent YTM). Bond prices are not likely to see too much of an upward movement in the coming week due to tight liquidity and the auction announcement. There is no fresh price trigger for the market, the dealer said.

Call rates were tight between 5.80 and 6 per cent. There was no reverse repo auction as the Reserve Bank of India (RBI) was closed for public transactions on account of its annual closing of accounts.

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