The Hindu Business Line : Rupee firmer; gilts gain

Mumbai: THE rupee gained 8 paise on good dollar inflows to close the day at 46.6550/6650 on Monday against the dollar up from Friday's close of 46.73/74 in the local currency markets.

"There was good dollar supplies in the market mainly through foreign banks and there seemed to be no corporate demand,'' said a dealer in a private sector bank.

The central bank was seen trying to curb the appreciation of the rupee by buying dollars at 46.65 levels through state-run banks, said a dealer.

The rupee touched an intra-day high of 46.6175, but came off to close lower due to RBI intervention.

The rupee opened the day at 46.70/71, which was the intra-day low.

It was a choppy day in the forward dollar market with premia ending the day lower than Friday's closing levels.

The six months forward closed at 2.23 per cent (2.48 per cent) while the one-year closed at 2.03 per cent (2.20 per cent).

Intra-day the premia were seen plunging even further as demand for forward contracts from importers and FCNR borrowers cooled as compared to the previous weeks, said a forward dealer.

In the government securities market, G-sec prices rose by 10-15 paise on top RBI officials stating that there would be no open market operations immediately.

Fears of an open market operation, a liquidity suction mechanism, had left the markets lacklustre on the previous trading day. Traded volumes were as high as Rs 7,200 crore with bullish sentiment prevailing in the markets, said dealers.

The 9.81 per cent 2013 paper closed at Rs 130.47 and a corresponding yield of 5.74 per cent after opening the day at Rs 130.33. The 7.40 per cent 2012 paper closed over ten paise higher at Rs 111.57 and a yield of 5.72 per cent.

In the longer end, 8.07 per cent 2017 paper closed at Rs 119.48 up from the open of Rs 119.32.

In the inter-bank call money market, call rates were at 4.80-5.00 per cent with easy liquidity.

Through the LAF window, the central bank accepted all 26 bids worth Rs 10,350 crore for the one-day repo and all three bids worth Rs 10,020 crore for the 11-day repo at the repo rate of 5 per cent.

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