Financial Daily from THE HINDU group of publications
Friday, Dec 05, 2003
Financial Daily from THE HINDU group of publications Friday, Dec 05, 2003 |
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Money & Banking
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Forex Rupee stays firm; bond prices crash Our Bureau
MUMBAI: The rupee ended at 45.6250 against the dollar on Thursday, unchanged from Wednesday's levels, in a lacklustre forex market. After opening the day at 45.61, the domestic currency touched an intra-day low of 45.64, before climbing back to its closing levels. Dealers said demand and supply of the greenbacks were more or less evenly matched today, with the Reserve Bank of India continuing to play an active role in supporting the rupee around these levels. The forwards market saw some demand for near-term cover from importers taking the one-month premium to - 0.70 per cent. The six-month premium closed at - 0.89 per cent (-0.16 per cent) while the one-year premium ended at 0.17 per cent (0.12 per cent). Bond prices crashed by around 35-65 paise in the longer maturities triggered by massive sell-offs towards the end of the day, following the announcement of results of the auction of the 6.01 per cent 2028 paper. Dealers said the market had expected the yield of this paper to be fixed at around 6.04-6.05 per cent levels. Instead the yield was fixed at 6.25 per cent. "This means that the entire yield curve in the longer end will have to get realigned. The yields on other 15 and 20 year papers will have to rise to meet these levels," said a dealer. The 7.40 per cent 2012 paper ended at Rs 114.75/85 after opening higher at Rs 115.40. The 7.27 per cent 2013 paper opened at Rs 115.94 and went down to Rs 115.60. One dealer with a leading primary dealership said, "Depending on whether mutual funds decide to cut their losses on Friday, one can estimate the extent of losses that may have to be suffered by others in general. If mutual funds exit in a big way, prices will crash much more." Call rates remained steady at 4.50 per cent in the inter-bank market In the one-day repo, RBI received and accepted 58 bids amounting to Rs 32,930 crore.
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