The Hindu Business Line : Rupee weakens; bonds decline

MUMBAI: The rupee was weaker against the US dollar on Friday, as the greenback rallied globally. Month-end demand dollar demand by oil companies also pushed down its value, said dealers.

The rupee opened at 45.75/76, touched a low of 45.8250 during intra-day trade before closing at 45.80/81; about 10 paise lower than Thursday's close of 45.71.

According to a dealer with a private bank, the RBI report released on Thursday had a slightly bearish outlook for interest rates and exchange rates, which also led to dollar buying.

As there are still two to three more days of month-end buying, the rupee is likely to break the 45.85 barrier next week and travel towards 46.02 levels, the dealer said.

In the forward premia market the six-month premium closed at 0.65 per cent (0.7 per cent) and the one-year at 0.5 per cent (0.5-0.52 per cent).

Bond prices opened firm but weakened during the day and closed 25-50 paise lower after the government stock auction. This was a technical correction as players wanted to cut losses after the two-day rally, said dealers.

Though inflation inched up to 4.2 per cent from 4.14 last week, it was still below market expectations of 4.3 per cent.

The 7.49 per cent -12 year-2017 paper opened at Rs 102.37 (7.18 per cent) and closed at Rs 101.94 (7.23 per cent), down from the earlier level of Rs 102.41 (7.175 per cent YTM). The 10.25 per cent - 6 year-2021 opened at Rs 126.05 (7.39 per cent YTM) and ended trade at Rs 125.8 (7.42 per cent YTM), lower than Thursday's close of Rs 126.13 (7.39 per cent YTM). The 7.37 per cent - 9 year-2014 paper opened at Rs 102.58 (6.95 per cent YTM) and closed at Rs 102.47 (6.97 per cent YTM).

In the three-day reverse repo auction, under the Liquidity Adjustment Facility, the RBI received and accepted 21 bids for Rs 3,685 crore. In the CBLO market, there were 287 trades for Rs 11,785.75 crore in the range of 1-5.3 per cent. Call rates were between 5-5.30 per cent and closed below 4 per cent (5.25-5.30 per cent).

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