The rupee opened a tad lower than the previous close, at 43.6850 per dollar, as against Tuesdays level of 43.67/68, and weighed down further due to dollars gains against international majors in the overseas market, coupled with oil importers and corporates flooding the market to meet their month-end dollar payments.
The stock market ended in the red as FIIs turned net sellers, also added pressure on the rupee, said a dealer of a private bank. The market was also cautious a day prior to RBIs annual monetary policy announcement on Thursday, though traders said it is not expected to have much impact on the rupee.
In the forward segment, premiums also inched-up on account of paying pressure. The six-month annualised premium ended the day at 1.74% (as against the previous close of 1.64%), while the 12-month annualised premium closed at 1.49% (1.43%). Meanwhile government bonds ended higher, even though they did not sustain the days gains, on the back of expectations that RBI would announce an interest rate-neutral policy, said dealers.
However, trading was limited to a few key gilts, with the 6.85% 2012 and 8.07% 2017 bonds being the popular papers traded on Wednesday. The 8.07% stock ended at Rs 105.05, giving an yield of 7.42%, even as the benchmark 10-year paper, 7.38% 2015 found no takers and the yield edged down to 7.11%.
Trading volumes picked up on account of the rally and was recorded at over Rs 3,000 crore, of which, G-Secs accounted for Rs 2,000 crore, said a primary dealer. The auction of the 91-day and 364-day treasury bills, aggregating Rs 4,000 crore, which included an MSS component of Rs 2,500 crore, was well bid.
The cut-off yield on the 364-day T-bill inched down to 5.6% against 5.64% posted a fortnight ago, while the cut-off yield on the 91-day T-bill ended static at 5.1183%. Meanwhile, call rates ruled easy, ending at 4.6-4.7% at the overnight call money market, amid a surfeit of liquidity in the system, with most trades done below the reverse repo rate of 4.75%. RBI absorbed Rs 32,625 crore through 39 bids at the reverse repo window, under LAF.