The Hindu Business Line : Rupee continues to slide; bonds rally

MUMBAI: The rupee breached the psychological level of 46 against the dollar for the second time this month as month-end demand boosted the US currency in the local forex market. The rupee opened at 45.90/91, touched a low of 46.02 before ending trade at 45.96/97, lower than the previous close of 45.80/81.

The dollar appreciated against most overseas currencies like yen, euro and pound, which added to the pressure on the rupee, said dealers. There was some bit of selling by exporters, which helped the rupee cut losses.

As long as the country's trade account and current account are in deficit, the rupee is not likely to appreciate much, said a dealer with UTI Bank.

The bond market opened weak, but improved because of ease in liquidity. Prices increased about 10-15 paise, said dealers. There was lot of buying interest in the market.

The 7.49 per cent -12 year-2017 paper opened at Rs 102 (7.22 per cent YTM) and closed at Rs 102.11 (7.21 per cent YTM), up from Friday's level of Rs 101.94 (7.23 per cent). The 7.37 per cent - 9 year- 2014 paper opened at Rs 102.51 (6.96 per cent YTM) and ended trade at Rs 102.5 (6.96 per cent YTM) against the earlier close of Rs 102.47 (6.97 per cent YTM).

Call rates were unchanged between 5.25 percent and 5.30 per cent. With the Reserve Bank of India (RBI) starting the second LAF from Monday, there will be less volatility in the call market, said a dealer with a private bank. Banks that do not get good rates in the call market would prefer the RBI rates, he said.

In the first one-day reverse repo auction, under the Liquidity Adjustment Facility, RBI received and accepted 16 bids for Rs 4,620 crore. The second auction saw 11 trades amounting to Rs 1,625 crore. In the CBLO market, there were 246 trades for Rs 10,969.05 crore in the range of 4.3 to 5.5 per cent.

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