The Hindu Business Line : Rupee tad higher; bond prices rally

MUMBAI: Apprehensions of liquidity pressure weighed on the domestic debt market on Thursday, with inter-bank call rates soaring to 5.10 per cent levels.

Dealers said, there were too many borrowers and too few lenders. mismatch.

"People want to borrow ahead of the long-weekend in Mumbai, that could be another reason for call rates to harden", said a dealer with a private sector bank.

The bond markets, however, shrugged off the high call rates, as bond prices rallied by around 50 paise across some maturities in a buoyant Government securities market.

The 7.38 per cent 2015 paper opened at Rs 104.50 -6.78 per cent YTM- and got dealt up to Rs 105.03- 6.73 per cent YTM.

Dealers said the market was betting on lower inflation rates and the lack of any action by the RBI on the interest-rate front in the mid-term review of the monetary and credit policy on Tuesday.

In the CBLO market, 160 transactions were conducted amounting to Rs 5,366.25 crore, in the rate range of 4.55 - 5 per cent.

In the 7-day repo under LAF, the RBI received and accepted one bid amounting to Rs 30 crore at 4.50 per cent. In the 4-day repo, the central bank received and accepted 9 bids amounting to Rs 1,770 crore also at 4.50 per cent.

The rupee closed around three-paise stronger at 45.73 per dollar as against its previous closing at 45.76/77.

Dealers said the market was flush with dollar supplies. Exporters were also selling dollars and there were some FII related flows. The domestic currency opened at 45.75 and got dealt up to 45.78 on the back of some dollar buying by oil majors. There was another round of selling of the greenbacks, once the euro started to appreciate, dealers said.

Meanwhile, in the forwards market, the six-month premia ended at 2.68 per cent (2.67 per cent) while the one-year premia ended at 2.15 per cent (2.12 per cent).