The Hindu Business Line : Rupee gains; bond prices fall

On Friday, the rupee opened at 45.38 and fell to a low of 45.50 due to demand from oil companies and demand by importers. Speculator demand later pushed the rupee up to 45.34 about eight paise up from Thursday's close of 45.42.

While the euro's gain against the dollar was consolidation, the yen rose because of the repatriation of funds by Japanese investors, the dealer said.

This appreciation in the rupee is more of a technical correction and the dollar could rally early 2006, he said.

The forward premia has been inching up reflecting the fear of liquidity pressure due to the IMD redemption. The 12-month premium closed at 0.82/93 per cent (0.7 per cent) and the six-month premium closed 1.1 per cent (0.85 per cent).

Bond prices fell by 15 paise following the statement by the RBI Governor, Dr Y.V. Reddy, that there could be some pressure on liquidity due to IMD redemptions.

The 8.07- 12-year-2017 paper opened at Rs 106.51 (7.20 per cent YTM) and closed at Rs 106.40 (7.21 per cent YTM), down from yesterday's level of Rs 106.51 (7.20 per cent).

The 10.25-16-year-2021 paper opened at Rs 126.32 (7.36 per cent YTM) and closed at Rs 126.12 (7.38 per cent), down from Thursday's close of Rs 126.32 (7.37 per cent YTM).

Dealers said bond prices next week would depend on the liquidity position. Call rates were around 6.25 per cent and closed at 6.40 per cent (6-6.05 per cent).

In the first three one-day reverse repo auction, the RBI received and accepted five bids amounting to Rs 3,390 crore and one bid for Rs 20 crore in the second auction. In the three-day repo auction, RBI received and accepted three bids for Rs 1,085 crore.

In the CBLO market, there were 329 trades for Rs 14,747.45 crore in the range of 5.8-6.35 per cent.