The Hindu Business Line : Rupee strengthens; bond prices firmer

MUMBAI: The rupee closed higher against the US dollar on Friday, as there were capital inflows and export-related supplies. The inflows kept the rupee buoyant even as the dollar strengthened against other major currencies, said dealers.

On Friday the rupee traded in the range of 44.17-44.24. It opened at 44.22, touched a low of 44.24 but moved up to end at 44.19, higher from Thursday's close of 44.25/26.

The forward premia saw a lot of receiving interest, with the one-year premium closing at 1.65 per cent (1.77 per cent) and the six-month premium closing at 2 per cent (2.3 per cent).

The movement of the rupee will depend on the liquidity situation next week, said a dealer with a private bank. The dollar is likely to be strong and the rupee may touch 44.40 levels.

Inflation was 4.51 per cent, higher than the previous week's 4.4 per cent.

The bond market saw a rally due to the reduction in the size of the auction and improvement in the liquidity position. Prices gained between 40 and 50 paise by the end of trade.

The 8.07 per cent-11 year-2017 paper opened at Rs 105.32 (7.35 per cent YTM) and closed at Rs 105.40/41(7.34 per cent YTM) against Thursday's close of Rs 104.82 (7.42 per cent YTM). The 10.25 per cent -15 year-2021 paper opened at Rs 125.48 (7.43 per cent YTM) and closed at Rs 125.3 (7.45 per cent YTM)

"The market should consolidate at these levels, though a slight dip in prices is likely ahead of auction on Tuesday. We need to watch the liquidity situation," said a dealer with a private bank.

The call rate closed at 6.5 per cent (6.75 per cent) though deals were done at 7.10 per cent in the early session of trade.

In the first three-day reverse repo auction, RBI received one bid for Rs 1,000 crore and 13 bids for Rs 3,060 crore in the repo auction. In the second three-day reverse-repo auction, RBI received six bids worth Rs 1,505 crore and seven worth Rs 2,055 crore in the repo auction. In the CBLO market, there were 414 trades for Rs 17,201.65 crore in the 5.25-6.50 per cent.