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Wednesday, May 04, 2005

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Rupee weakens; bond prices rally

Our Bureau

MUMBAI: The rupee continued to trade in a narrow range due to factors such as global strengthening of the dollar and speculation about revaluation of the Chinese yuan

On Tuesday, the rupee ended around 43.69 against the dollar, weaker than Monday's close of 43.5750/58. The forward premia market was slightly down because of selling by exporters and a rally in the bond market, the dealer added. The 12-month premium closed at 1.45 per cent (1.53 per cent), while the 6-month premium closed at 1.70 per cent (1.80 per cent).

The bond market saw a rally due to the cut-off price for the bond auctions being higher than expectations.

The 8.07-12-year bond ended at Rs 104.50 on Tuesday, about 50 paise higher than Monday's close of Rs 104 on Monday. The bond had opened at Rs 103.95 on Tuesday.

A dealer with a private bank said there was wide participation in the auction of 7.55-2010-10-year bonds and 7.50-2034 29-year bonds. There was also buying of illiquid securities by state-run banks.

The 7.55 per cent-2010-10-year paper ended at Rs 102.65 (6.92 per cent YTM) against Monday's close of Rs 102.60 (6.93 per cent YTM).

A primary dealer said the market was expecting the cut off price for the paper to be around Rs 102.25/30. As the cut-off price was higher than market expectations, sentiment changed to positive and demand in auction papers increased, the dealer said.

The 7.38-10-year-2015-benchmark paper ended at Rs 100.90 (7.25 per cent YTM) against Monday's close of Rs 100.60 (7.294 per cent YTM).

Call rates were between 4.95 per cent and 5 per cent (5.00-5.05 per cent).

In the one-day reverse repo auction, under the Liquidity Adjustment Facility, RBI received and accepted 44 bids amounting to Rs 34,160 crore. The CBLO market saw 195 trades amounting to Rs 8,325.30 crore in the range of Rs 4.75 per cent to 5 per cent. This was the highest ever volumes seen in the CBLO market.

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