Crude rally takes toll on Re, bonds
A sharp rise in domestic inflation figures and a marginal increase in global crude prices severely dented sentiment in the local forex and bond markets on Thursday.
By ET Bureau |
MUMBAI: A sharp rise in domestic inflation figures and a marginal increase in global crude prices severely dented sentiment in the local forex and bond markets on Thursday. While the rupee fell over 35 paise to breach the 43-per-dollar mark, bond prices dipped by more than 70 paise, reports Our Bureau in Mumbai.
Market participants were seen preparing for an extended weekend. The yield on the benchmark 10-year bond, the 8.24% bond which will mature in 2018, ended the day at 9.21% levels, rising from its previous close of 9.09%.
Market participants were anticipating price levels to be in the 12.40% region, which hit market sentiment during early trade. The rise in inflation has stoked further concerns of the central bank tightening its monetary policy. Higher-than-expected industrial output data released earlier this week had already, given rise to these concerns.
Also, dealers sought to cut their positions with a spate of holidays coming up. ���Most dealers will be back only on Wednesday, and in volatile conditions like these, nobody wants to sit on large positions,��� said a senior official with a bond house. Most dealers will be attending a forex-dealers conference in Macau over the weekend. With Tuesday also being a government holiday, market participation on Monday is also expected to be minimal.
Cash conditions continued to remain under strain, with banks collectively borrowing Rs 31,635 crore from the central bank over two repo auctions of its liquidity adjustment facility (LAF). Rates in the overnight call money market ended the day at 9%, after transactions worth Rs 14,714 crore were carried out. Rates in the market for collateralised borrowing and lending obligations (CBLO), where banks and other financial institutions borrow funds by placing surplus government bonds as collateral, ended the day at 9% after transactions worth Rs 21,331 crore were struck.
Market participants were seen preparing for an extended weekend. The yield on the benchmark 10-year bond, the 8.24% bond which will mature in 2018, ended the day at 9.21% levels, rising from its previous close of 9.09%.
Market participants were anticipating price levels to be in the 12.40% region, which hit market sentiment during early trade. The rise in inflation has stoked further concerns of the central bank tightening its monetary policy. Higher-than-expected industrial output data released earlier this week had already, given rise to these concerns.
Also, dealers sought to cut their positions with a spate of holidays coming up. ���Most dealers will be back only on Wednesday, and in volatile conditions like these, nobody wants to sit on large positions,��� said a senior official with a bond house. Most dealers will be attending a forex-dealers conference in Macau over the weekend. With Tuesday also being a government holiday, market participation on Monday is also expected to be minimal.
Cash conditions continued to remain under strain, with banks collectively borrowing Rs 31,635 crore from the central bank over two repo auctions of its liquidity adjustment facility (LAF). Rates in the overnight call money market ended the day at 9%, after transactions worth Rs 14,714 crore were carried out. Rates in the market for collateralised borrowing and lending obligations (CBLO), where banks and other financial institutions borrow funds by placing surplus government bonds as collateral, ended the day at 9% after transactions worth Rs 21,331 crore were struck.
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