The Hindu Business Line : Re firms up; gilts decline

The rupee opened at 49.04/05 and slipped to a day's low of 48.06. However, most nationalised banks were liquidating long positions and the rupee strengthened to a high of 48.98, before slipping to its closing levels on the back of dollar demand from foreign banks. Forex dealers said that the market continues to be jittery on account of continued tensions on the border.

Meanwhile, forwards tightened further with the six-month premium ending at 6.20 per cent (6.16 per cent) and the premium for one-year ending at 5.73 per cent (5.61 per cent).

Securities prices lost by more than a rupee as cross-border tension triggered off some selling in the bond market.

The yield on the benchmark ten-year yield, the 11.03 per cent 2012 paper, is now trading at 8.02 per cent. This paper, which had opened at around Rs 121.60 closed a rupee lower at Rs 120.60.

The 11.50 per cent 2011, which had opened at Rs 124.70, closed at Rs 123.70 (YTM -- 7.92 per cent) and the 7.55 per cent 2010 paper ended at Rs 97.80 after opening at Rs 98.60.

Dealers said that the sentiment in the market continued to be weak and expect the selling pressure to continue.

In the inter-bank call money market, the call rates eased to around 6.75 per cent from opening levels of 7.50 per cent.

The RBI did not receive any bids in its repo and reverse repo auction held on Friday.

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