Date:01/03/2005 URL: http://www.thehindubusinessline.com/2005/03/01/stories/2005030100792100.htm

Back Rupee tad higher; bonds weaker

Our Bureau

MUMBAI: The rupee closed stronger at 43.68 against the dollar on Monday, a day when attention was focused on the Union Budget. The rupee had closed at 43.72/73 on Friday. The local currency opened at 43.67/70 and rose to a high of 43.62 in intra-day trade.

A dealer at a private bank said that there was some buying by nationalised banks, but trade was lacklustre, as the focus was on the Budget.

The dealer also said that the rupee could depreciate against the dollar, as the overall economic scenario allowed the RBI to absorb more dollar inflows.

The forward premia market edged up slightly, with the 12-month premium closing at 1.46 per cent (1.40 per cent) and the six-month premium closing at 1.68 per cent (1.65 per cent).

The bond market closed weak as the government borrowing was more than expected, said a primary dealer with a private bank. The 7.38 per cent 10-year benchmark closed weak at Rs 106.25/30 (6.55/54 per cent YTM) against Friday's close of Rs 106.68/70 (6.49 per cent YTM). The 10-year benchmark opened on Monday at Rs 106.95/Rs 107 (6.45 per cent YTM) and went up to Rs 107.05 before falling.

According to the dealer, this was a general reaction to the Budget. The market has reached the bottom and will rise from these levels, the dealer added.

The call rates remained in the 4.60- 4.75 per cent range. In the one-day repo/reverse repo auctions, RBI received and accepted 40 bids worth Rs 30,930 crore.