The rupee on Monday ended weak against the dollar as some foreign banks accumulated dollars to meet demand from foreign funds, dealers said. The rupee was at Rs 46.3600 per $1, down from Rs 46.3100 per $1 on Friday. Dealers said some importers also bought dollars to meet month-end payments. There was good demand from custodial banks, a dealer at a private bank said. There seems to be good foreign fund outflows. And even the weekend supplies were easily absorbed by the demand. Month-end demand was on cash basis, but we did not see much of an oil demand. There were some cancellations but it was very small, said the dealers. Also, some banks that had sold on Friday bought back dollars today because of the dollars gains (overseas). On Friday and Monday, the dollar had gained against leading currencies drawing strength from stronger US economic data, released last week.
FORECAST-Rupee fluctuation seen range bound on Tuesday
The benchmark 1-year forward dollar/rupee premium ended at 2.05% annualised, a tad lower from 2.08% on Friday. The six month forward annualised premium was available at 2.36. In early trade, a US bank bought forward dollars in the near month forwards, mainly for November maturity, dealers said. But premiums did not move up significantly because some state-owned banks sold forward dollars, dealers said. Movement in forwards will be significant only when the spot rupee breaks the Rs 46.30-46.50 per $1 band, dealers said. The rupee is expected to rise as month-end demand from importers fades after Monday. Corporate demand, mainly from oil companies, is likely for meeting daily needs. A further rise in the greenback overseas may prompt some banks to buy dollars. Dollar supplies from exporters and state-owned banks should support the rupee at below Rs 46.40 against the dollar, said dealers.
FORECAST:The forward seen stable on Tuesday
Despite positive sentiments due to contained inflation, a slide in global oil prices and receding fears of a hike in interest rates, government bonds succumbed to profit-selling and ended with moderate declines across the spectrum. Key gilts across the board fell by 20-80 paise on a new round of profit-selling in the absence of follow-up buying support after the recent smart rally, dealers said. Benchmark, 10-year 7.37 % 2014 stock dropped by 60 paise to close at Rs 108.90/95 with the yield rising by seven bps to 6.12 per cent. 7.38 % , 2015 gilt dipped 55 paise to Rs 109.05/10, the 7.46 %, 2017 bond lost 65 paise at Rs 106.10/20 and the actively traded 8.07 %, 2017 paper tumbled by 75 paise to Rs 112.05/15. The 6.85 %, 2012 stock fell by 20 paise to Rs 103.20/30, 7.40 %, 2012 bond plunged by 55 paise to Rs 106.85/90 and the 7.27 %, 2013 paper nose-dived by 80 paise to Rs 106.00/10.
FORECAST: Gilts seen volatile on Tuesday.
(Compiled by Sitanshu Swain)