Re at two-week low; gilts, forex lacklustre

Mumbai, March 22 | Updated: Mar 23 2005, 05:50am hrs
The government securities market and the foreign exchange market remained dull and lacklustre due to the absence of any significant players in the market.

About one million public sector bankers were on a one-day nationwide strike on Tuesday, due to which the traded volumes in both markets was extremely thin on Tuesday, as most public sector bankers were on a strike.

The rupee ended at a two-week low of 43.73, marginally lower than Mondays close of 43.68, as the dollar clung to its broad gains ahead of an expected 25 basis point hike in Federal Reserve rate.

The market opened bearish on the back of surging global crude oil prices and limited dollar inflows, coupled with a slight demand for the greenback by oil corporates.

The market was dull in the morning, with the Indian unit stuck at the 43.76-level. But some dollar sell-offs by banks in late afternoon deals propped-up the rupee to 43.72/73, before it closed at that level, said a private bank dealer.

However, volumes were thin in the absence of state-owned banks and primary dealers. Market participants are awaiting the outcome of the Federal Open Markets Committee (FOMC) meet scheduled for Tuesday night.

While dealers have discounted the expected rate hike, they are watchful for statements emanating from the Federal Reserves chairman, Alan Greenspan, in respect of outlook on the US economy and future interest rate scenario. The forward market was quiet as premiums tracked the spot. The market was a tad biddish in the morning with banks looking to pay.

The six-month annualised premium payable in August ended at 1.52% while the 12-month annualised premium payable in March 2006 closed at 1.4% on Tuesday.

The government securities market witnessed thin volumes, with state-run banks, the largest investors in government bonds, remaining absent.

The yield on the benchmark 10-year 7.38% 2015 bond rose to 6.71% from the previous days close of at 6.70%, as fears linger that high oil prices would rekindle domestic inflationary pressures. Call rates remained range-bound at 4.70%-4.80%, amid comfortable liquidity. RBI received 23 bids, aggregating Rs 17,920 crore at the one-day reverse repo window at a fixed rate of 4.75% under the LAF.