The rupee closed at a 13 month high. Significant dollar inflows, the dollars weak global standing and indications from the RBI that it is comfortable with further rupee appreciation helped the rupee climb. The Indian unit closed the day at Rs 47.91/92 per up from the previous days close of Rs 47.94/95 levels. The dollar continued to be undermined by prospects of a US military strike on Iraq on Wednesday, falling to a three-year low against the euro for a fifth successive day in European trade. Wednesdays dollar inflows were higher than usual, having piled up on account of Mondays holiday in the United States.
FORECAST: Rupee to stay firm on Thursday
Forward premiums eased a shade; however, the premia did not decline much, as the market paused for a breather after recent falls. The annualised rupee premium on the 6-month dollar eased to 3.14 per cent against the previous 3.15 per cent. Steady appreciation of the rupee has seen the forward rates go down for sometime now. The market is witnessing negligible volumes as well, said a dealer with a private bank. A weaker dollar and low domestic inflation have allowed the rupee to appreciate without hurting Indias export competitiveness. The month-wise premia for the short term were 3.0/3.5 paise from January, 14/16 paise for February and 26/27 paise for March. In the far forwards, October dollar was at 107/109 paise, November dollar was at 117/119 paise and December dollar was at 128/130 paise at the end of the day.
FORECAST: Forward premia to remain easy on Thursday
G-Secs prices showed a mild rise. Gilts market was quiet, with thin volumes with select bonds attracting sustained buying enquiries. Medium-term papers rose by 5-8 paise while those at the longer end gained by 10-20 paise, dealers said. Prices rose after the RBI set a higher than expected cut-off at its 91-day and 364-day treasury bill auction on Wednesday.
The RBI set a cut-off price of Rs 94.80 at its 364 day auction and Rs 98.63 at the 91 day auction. The benchmark 7.40 per cent 2012 paper was trading at Rs 110.98 levels in late trade higher that the day and the actively traded 11.50 per cent 2011 paper was up by 10 paise to Rs 138.40. The 7.49 per cent, 2017 paper ended the day at Rs 113.70 and the 7.46 per cent 2017 paper was at Rs 113.80/85 towards the days close.
FORECAST: Gilt prices to remain range-bound on Thursday
Complied by Abhijit Agrawal