The Hindu Business Line : Rupee at nine-month high; securities fall

MUMBAI: The rupee ended at a nine-month high on the last day of 2004 as dollar nose-dived overseas and banks unwound long-dollar positions amidst higher foreign inflows.

Government securities market also saw hectic activity with gilt prices plummeting by over 90 paise from the day's peak levels after RBI said it would conduct Rs 7,000 crore bonds auction on January 4.

The rupee appreciated to close 26 paise higher at 43.47/48 against the dollar as sentiment in the forex market was upbeat. On Thursday, it ended at 43.73/74. It opened strong at 43.6850 and moved up further touching the day's high at 43.43 per dollar, dealers said.

Foreign investor inflows and some external commercial borrowings coupled with bullish sentiment on the euro and yen drove the rupee up.

As month-end dollar demand was not as high as expected, there was unwinding of long-dollar positions.

All-round selling of greenbacks aided the rupee movement, as did the booming share market, which ended above 6,600 points.

Annualised forward premia dipped as exporters covered their exposures. The six-month premium closed at 1.72 per cent (1.85 per cent) while the one-year forward ended at 1.31 per cent (1.40 per cent).

Gilts opened a shade higher than previous levels and buying interest was seen as inflation dipped 23 basis points to 6.50 per cent for the week-ended December 18, more than market expectations.

The 7.38 per cent paper ended at Rs 105.45 at a yield of 6.65 per cent. Before the auction announcement, it was trading at 6.55 per cent. The 7.55 per cent 2010 paper fell 80 paise from the intra-day peak levels to end at Rs 104.60 at a yield of 6.52 per cent.Call rates in the inter-bank market softened towards the end of trading to 3 per cent after it had opened close to 6 per cent level.

Under the LAF window, the RBI accepted all 13 bids worth Rs 2,420 crore in the three-day reverse repo. CBLO volumes reached their highest level to Rs 7,068 crore as 155 trades were conducted.

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