The Hindu Business Line : Rupee up; gilts rally

MUMBAI: THE rupee closed stronger on Friday by around 5 paise on the back of good supplies at 48.24/25 per dollar, as compared to the previous close of 48.29/30.

Dealers said that after opening the day at 48.2950/3050, the currency fell to an intra-day low of 48.32, before slowly inching its way back up following good export realisations.

"Exporters and bankers who were holding long dollar positions unwound their dollars as there was practically no demand for the greenbacks,'' said a forex dealer.

Forwards closed easy with the six-month premium closing at 5.97 per cent (6.06 per cent) and the premium for one year closing at 5.80 per cent (5.87 per cent).

Securities prices rallied by around 35-40 paise from opening levels as easy liquidity conditions and bullish undertone set the mood in the market, with volumes clocking a high of around Rs 6,700 crore.

The 9.85 per cent 2015 paper rose to close at around Rs 115.30/35 after it had opened at Rs 115. The 11.03 per cent 2012 paper, which had opened at Rs 121.98 closed at Rs 122.55/60 and the 11.50 per cent 2011 paper closed at Rs 124.75/80 after opening at Rs 124.40. The yield on this paper is currently at 7.85 per cent.

Dealers said that the RBI Deputy Governor, Dr Y. V. Reddy's statements on a possible cut in the CRR in one-shot had triggered a spur in activity in the market.

According to one dealer, "The market expects another round of Fed rate cuts after the release of the US data on Thursday. With this round of cuts in the US, players in India are hoping for a rate cut locally.''

Dealers attribute the high activity in the bond markets on Friday to the bullish positions taken by foreign banks. "Since the New Year, foreign banks have been particularly aggressive and have been very active buyers in the market,'' said another dealer.

In inter-bank call money market, the call rates closed at 6.40-6.60 per cent.

In the three-day repo auction, the RBI received and accepted three bids of Rs 6,180 crore at 6.50 per cent.

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