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Saturday, Apr 09, 2005

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Rupee weakens; bonds choppy

Our Bureau

MUMBAI: The bond market was choppy, though it recovered towards the end of the day. The yield on the 10-year benchmark 7.38 per cent 2015 Government security paper breached the seven-per cent level, as markets nervously awaited inflation figures and the Government's decision on domestic oil price, said dealers.

A dealer with a private bank said that overall the market was down, though it recovered on the statement that there would be no fuel hike. Also inflation figures were within market expectations.

The 2015 paper closed at Rs 102.65 (7.02 per cent YTM), lower than Thursday's close of Rs 102.90 (6.98 per cent). The bond had opened at Rs 102.90 (6.96 per cent YTM) on Friday. It went down by about 50 paise, said the dealer.

The bond may stay at these levels or recover slightly as all the negative factors have been discounted for, the dealer said. "Inflation figures were as expected and the oil price rise has been put off. So, I feel the bond prices may recover slightly," he said.

The rupee ended at Rs 43.75/76 against the US dollar, slightly weaker than Thursday's close of Rs 43.72/73. The rupee, which opened at Rs 43.75/76 on Friday, traded in a narrow range with downward movement, as markets were waiting for inflation figures and a decision on the oil price hike, said dealers.

In intra-day trade, the rupee went up to Rs 43.74/75, but closed a shade lower.

For the next week the rupee is expected to weaken, the dealer said. "The dollar is likely to strengthen against other foreign currencies as well. I feel the euro will come down to $1.27 or $1.30 levels against the dollar. This will also impact the rupee. The rupee may touch levels of Rs 44 against the dollar."

The forward premia market went up second half of the day, with the six-month premium closing at 1.72 per cent (1.76 per cent) and the 12-month premium closing at 1.53 per cent (1.48 per cent).

The inter-bank call rate was unchanged at 4.70 per cent and 4.80 per cent. The CBLO market saw 171 trades aggregating Rs 6624.7 crore in the rate range of 4.45 per cent to 4.75 per cent. In the one-day reverse repo under the liquidity adjustment facility, the RBI received and accepted 35 bids amounting to Rs 27,015 crore.

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