Rupee and call rate dip, bonds look up

Mumbai, March 28 | Updated: Mar 29 2005, 05:30am hrs
The rupee fell for the fourth consecutive day over the speculation that oil refiners and other state-owned companies will be buying dollars to pay month-end bills.

In a range-bound trade, the local currency closed at 43.78/79 on Monday, a tad higher than Thursdays close of 43.75.

The call rates eased to 3.50/4.00% for the reporting day, amidst ample liquidity. Even as most deals were struck in the bank at 3.00/3.50%, there were some stray deals at as low as 1%.

RBI has mopped up Rs 23,660 crore by accepting 37 bids at one day reverse repo auction at a fixed rate of 4.75% under the liquidity adjustment facility (LAF).

The forex market witnessed good supply following a long weekend, which tested the rupee to an intra-day low of 43.81. However, dollars rally vis-a-vis the other global currencies capped the rupees gains in the afternoon deals, said dealers. Despite bunched up inflows, the rupee witnessed a movement of two paise in the reporting day.

The local currency continues to look bearish on the back of Reserve Bank of Indias (RBI) sustained intervention in the forex market. RBI has been intervening in the market to curb the volatility of the rupee and its overvaluation that is estimated around 4%, said a dealer.

In the forward market, the yield on dollar-rupee premiums rose tracking the weak rupee. The six-month annualised premium notched up by 13 basis points to end the day at 1.66%, while the 12-month premium closed at 1.41% as against the previous close of 1.36%.

The benchmark 10-year gilts looked positive, following a statement by a finance ministry official regarding eased concern of higher debt sales in the first half of the financial year starting April 1.

The yield of 7.38% 2015 stock ended the day at 6.64/65% as against the previous close of 6.67% while its price rose by 15 paise to end the day at 105.40/45. The G-Sec market was in a wait and watch mode ahead of the announcement of the borrowing programme even as it witnessed some spurts in the morning deals, said a primary dealer.

Meanwhile, the RBI announced the auction calendar for the first half of the fiscal year 2005-06. As per the borrowing calendar, the government will borrow Rs 24,000 crore more in the first half of FY 2005-06 at Rs 83,000 crore as against Rs 59,000 crore in the first half of the corresponding period of last year.