The Hindu Business Line : Rupee rebounds; bond prices rise

MUMBAI: The rupee gained against the greenback on Wednesday on hopes that investments into emerging markets would continue as the US interest rates are not expected to rise much. Good dollar supply also fuelled the upward momentum, said dealers.

The rupee opened stronger at 45.75/76 due to the 100 points gain in euro overnight. It touched a high of 45.71/72, as all Asian currencies rallied against the dollar. This led to a dollar sell-off across the board. The rupee ended trade at 45.76, higher than Tuesday's close of 45.8350/8450.

In the forwards premia market, the six-month premium closed at 0.55 per cent (0.54 per cent) and the one-year at 0.45 per cent (0.44 per cent).

Bond prices went up 40 paise due to bullish factors such as easing of liquidity and a stable rupee. The market is also viewing the Rs 5,000-crore Government security auction scheduled for November 24 as positive. The expectation is that insurance companies and public sector banks would pick about Rs 3,000-3,500 crore of the paper, said dealers.

The market is expecting the cut-off yield on the 8.35 17-year 2022 Government paper to be 7.47 per cent or Rs 108.25. At these levels there could be lot of takers - - insurance companies, pension funds and state-run banks.

The 7.49 per cent-12 year-2017 paper opened at Rs 101.88 (7.24 per cent YTM) and closed at Rs 102.25 (7.19 per cent YTM) against the earlier level of Rs 101.85 (7.25 per cent YTM). The 7.37 per cent - 9 year- 2014 paper opened at Rs 102.55 (6.96 per cent YTM) and closed at Rs 102.59 (6.95 per cent YTM), up from Tuesday's level of Rs 102.53 (6.965 per cent YTM). The 10.25 per cent 16-year 2021 paper opened at Rs 125.44 (7.45 per cent) and closed at Rs 125.72 (7.42 per cent YTM).

The call rates were between 5.25-5.30 per cent (5.30 per cent). In the one-day reverse repo auction, under the Liquidity Adjustment Facility, RBI received and accepted 19 bids for Rs 8,140 crore. In the CBLO market, there were 283 trades for Rs 11,425.5 crore in the range of 5.15-6 per cent.

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