The Hindu Business Line : Rupee ends lower; bonds tad higher

MUMBAI: The rupee fell against the US dollar on Tuesday on month-end demand by corporates. The rupee opened lower than the previous close at 45.06/08 and ended at 45.26, almost 20 paise lower than Monday's close of 45.0450/05.

According to dealers, the rupee was volatile but moved in a single direction on Tuesday from the opening session. There were not many players and volumes were thin with overseas markets being closed. Therefore, even the slightest dollar demand pushed the rupee further down, said a dealer with a private bank.

Not many dealers are taking active positions, because of liquidity crunch and fear of IMD redemption.

In the forward market, the six-month closed at 1.53 (1.66 per cent) and the one-year closed at 1.03 per cent (1.20 per cent). In the bond market, prices rose by around 10 paise due to positive global factors and expectations of improvement in domestic liquidity by January.

Dealers said that despite the crunch in liquidity, there were other positives.

"The price of global crude eased to $57.9 and the US 10-year treasury yields have also softened to 4.38 per cent," said a dealer at a private bank.

The tight liquidity conditions are also expected to improve with inflows of around Rs 10,000 crore from the special deposit scheme and salary disbursals to the tune of Rs 8,000 crore expected in January, said dealers

The 8.07 12-year 2017 paper opened at Rs 106.36 (7.225 per cent YTM) and ended at Rs 106.45 (7.21 per cent YTM), higher than Monday's close at Rs 106.40 (7.21 per cent YTM)

The 10.25 16-year 2021 paper opened at Rs 126.16 (7.38 per cent YTM) and closed at Rs 126.25 (7.37 per cent YTM), higher than Monday's 126.21 (7.38 per cent YTM),

The call rate closed at the same level at 6.50-6.75 per cent, but touched an intra-day high of 7.20 per cent.

In the one-day reverse repo auction, RBI received no bids, and in the repo auction it accepted 36 bids for Rs 17,835 crore.

In the second auction, RBI received two bids for Rs 480 crore in the reverse repo auction and eight bids for Rs 3,580 crore in the repo auction.

In the CBLO market, there were 329 trades for Rs 10,922.60 crore in the range of 6.24-6.70 per cent.