The Hindu Business Line : Rupee sheds 7 paise; gilts decline

The rupee opened weaker at 44.43/45, touched a low of 44.52 and later strengthened to 44.39/40 as the yen gained 100 basis points against the dollar. The rupee closed at 44.41/42, seven paise lower than Tuesday's 44.34/35.

In the forward premia market, the six-month premium closed at 1.92 per cent (1.74 per cent) and the one-year premium ended at 1.4 per cent (1.32 per cent).

Bond prices too fell due to fears of inflation, as oil prices touched almost $67 a barrel. There was no buying initiative ahead of RBI's quarterly review of the monetary policy, said dealers.

"On Tuesday, there was good buying as call rates eased. But on Wednesday there was lot of selling because of the high oil price. The fear is this will add to the domestic inflationary pressure," said a dealer with a private bank.

The 8.07 per cent-11 year 2017 paper opened at Rs 106.6 (7.19 per cent YTM) and touched a low of Rs 106.46, before ending trade at Rs 106.48 (7.21 per cent YTM), against the earlier close of Rs 106.60 (7.19 per cent YTM).

The 10.25 per cent-15 year 2021 paper opened at Rs 126.55 (7.34 per cent YTM) and closed at Rs 126.44 (7.35 per cent YTM), 10 paise lower than the previous level of Rs 126.54 (7.34 per cent YTM).

Call rates were at 6.40 per cent (6.75 per cent). In the first one-day reverse-repo, the RBI received one bid for Rs 15 crore and 19 bids for Rs 8,395 crore in the repo auction. In the second one-day reverse-repo auction, the RBI received two bids for Rs 255 crore and 17 bids for Rs 4,810 crore in the repo auction.

In the CBLO market, there were 342 trades for Rs 14,013.75 crore in the rate range of 6.12-6.38 per cent.