The Hindu Business Line : Rupee volatile; bond prices fall

MUMBAI: After rising by over 30 paise on Monday, the rupee weakened against the US dollar in volatile trade on Tuesday and ended about 20 paise lower.

The rupee opened at 45.07/08 and moved up to 44.93/94. At these levels, exporters who had sold earlier booked profits, which pushed the rupee down to 45.

Once the rupee crossed this level, it did not recover and finally ended trade at 45.22/23, lower from Monday's close of 45.03. Supplies were also not as forthcoming as earlier, said dealers.

The forward premia moved up , with the six-month ending at 1.4 per cent (1.3 per cent) and the 12-month at 1.02 per cent (0.95 per cent).

Bond prices fell by 10-15 paise in a dull market that saw poor volumes. As the call rates were high, there was very little trading interest, said dealers. "Traders are not taking position due to the tightness in the call market," said a dealer with a private bank.

The 8.07 12-year 2017 paper opened at Rs 106.35 (7.22 per cent) and closed at Rs 106.26 (7.23 per cent YTM), against Monday's close of Rs 106.34 (7.22 per cent YTM). The 10.25 16-year 2021 paper opened at Rs 126.08 (7.38 per cent YTM) and closed at Rs 125.94 (7.40 per cent YTM) against the previous level of Rs 126.08 (7.39 per cent YTM).

Dealers said that the liquidity pressure was temporary. The position would be clear by Friday or Monday, as the outflow of the advance tax would come back into the system.

The call rate closed at 6.25 per cent and deals were done at 6.5 per cent (6.25-6.30 per cent).

In the first one-day reverse repo auction, the Reserve Bank of India received and accepted three bids amounting to Rs 480 crore, and eight bids for Rs 2,140 crore in the repo auction.

In the second one-day reverse repo auction, the bank received two bids for Rs 355 crore, and four bids for Rs 745 crore in the repo auction. In the CBLO market, there were 344 trades for Rs 16,303.05 crore in the range of 6.16-6.30 per cent.