The Hindu Business Line : Re stable; gilts recover

"The bunched-up dollar supplies was sufficient to meet the demand of corporates; therefore the rupee remained in a narrow band of activity,'' said the chief dealer in a public sector bank. Despite heightening war tensions in West Asia, there was little impact on the currency markets, conceded forex dealers.

In the forwards market, there was little activity with premia almost unchanged from previous levels. The six months premium closed at 3.65 per cent (3.64 per cent) and the one-year was at 3.46 per cent (3.44 per cent).

G-sec prices tumbled down by up to Rs 0.50-1.50 on war fears, but recovered later in the day on the back of buying interest by traders.

Traded volumes were as low as Rs 1,600 crore with Mr George Bush issuing ballistic statements and news reports of evacuations in Kuwait.

With the uncertainty of war looming, pricing papers had become difficult and players were wary of trading, said a dealer in a primary dealer. The 7.40 per cent 2012 paper opened at Rs 107 and fell as low as Rs 106.50 and later firmed to Rs 106.75 with a yield of 6.41 per cent. The ten-year benchmark, 9.81 per cent 2013 paper closed at Rs 124.80 with a yield of 6.45 per cent. It previously closed at Rs 125.50.

Liquidity was tight in the call markets.

Call rates ended at 5.30-5.50 per cent.

Through the LAF window, RBI accepted bids worth Rs 2,300 crore at the repo rate of 5 per cent.

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