Financial Daily from THE HINDU group of publications
Wednesday, Apr 28, 2004
Money & Banking - Forex
Rupee drops, G-secs down
Mumbai , April 27
TUESDAY'S exit poll tremor was not limited to the equities market. The rupee lost 13 paise against the dollar in the local forex market while bond prices fell by over Re 1 in the long-dated papers.
Dollar inflows were limited amid heavy demand from several importers and the Government securities market witnessed selling pressure.
The domestic currency closed at 44.2250/2400, touching the low of April.
"The forex markets have followed the equity markets today. Several banks and corporates bought dollars heavily fearing further fall in the Indian rupee due to the political uncertainty in the air,'' said Mr Vivek Royzada, forex analyst, Mecklai Financial.
With the exit polls suggesting a hung Parliament, the currency is expected to dip further till the poll results are finally out, he added.
On Monday, the market had witnessed thin trades although it was officially closed on account of elections. The rupee had closed at 44.09. The rupee opened on Tuesday lower at 44.1400/1450.
With the month-end nearing, corporate demand for the dollar is expected to accentuate and take it to 44.35/40 levels, according to a bank dealer.
In the dollar forward market, the discount reduced drastically with importer demand for forwards on the rise.
The six months forward closed at - 0.32 per cent (-0.65 per cent) and the one-year forward closed at - 0.14 per cent (-0.32 per cent).
In the domestic debt markets, the prices of Government securities fell on the news of the exit polls but recovered a tad towards end of trading session. Alongside, the Rs 5,000 crore 6.18 per cent 2005 market stabilisation bonds sailed through smoothly, getting oversubscribed twice.
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