The Hindu Business Line : Re ends lower; gilts weak

The dollar has been gaining strength against all international currencies since Friday. The gain has been further heightened over the weekend, said a dealer.

As a result `players did not want to be short on dollars'. In the latter half of the day, there was seen to be significant bidding interest in dollars, which saw the domestic currency grow a little weaker.

The currency opened at the closing levels of 48.20/21, touched an intra-day high of 48.1850/1950 — which dealers attribute to `bunched up supply of the dollar over the weekend'— and an intra-day low of the close.

The premia were dropping significantly on Monday, with the six-month premium closing at 3.68 per cent (3.75 per cent) and the one-year closing at 3.69 per cent (3.82 per cent).

Dealers attribute the fall in premia to abundant supply combined with selling of forwards by corporates and banks.

Bond prices were seen falling marginally by 20-30 paise across maturities in the government securities market.

Dealers contend that `event risk' is the reason for the fall of prices witnessed on Monday, which led to heavy selling by primary dealers and banks.

The Jammu temple incident, heightened tensions in Iraq are all being viewed as events which could blow up into bigger dimensions, said a senior dealer in a primary dealer.

The 7.40 per cent 2012 paper opened at Rs 107 and closed at Rs 106.81. The 9.81 per cent 2013 paper opened at Rs 112.20 and closed at Rs 111.90.

On the longer end, the 9.81 per cent 2013 paper opened at Rs 125.05 and closed at Rs 124.80.

"Players who had a high holding in g-secs, were seen selling heavily, to avoid losses in the event of unforeseen happenings,'' the dealer added.

In the inter-bank call money market, the call rates ended at 5.35 per cent without much volatility throughout the day.

In the LAF, the RBI received bids worth Rs 7,700 odd crore, all of which was accepted at the repo rate of 5.50 per cent.

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