Re closes higher at 48.41 vs dollar
The rupee staged a dramatic comeback on Monday as late gains in the stock market made traders hopeful about greater capital inflows in the coming weeks.
By ET Bureau |
MUMBAI: The rupee staged a dramatic comeback on Monday as late gains in the stock market made traders hopeful about greater capital inflows in the coming weeks. Bond rally resumed with the yield on the benchmark 10-year government bond falling to 5.55%. Liquidity was the best in many weeks as banks parked more than Rs 47,000 crore with RBI, with call rates reaching a two-week low. The rupee closed at 48.41 against the dollar, off a low of 48.75 and marginally higher than Friday���s close of 48.44 as month-end dollar demand from importers prevented a sharper rise. Dealers said the overall dollar weakness and the gains in stocks supported the rupee. The dollar fell broadly against major currencies, thanks to the outlook worsening for the US economy.
The stock market, however, was very choppy, but shares snapped a four-day slide and rebounded 2.2% as investors bet that RBI would cut rates to boost sentiment. Government bonds rallied smartly, with the 10-years gaining, pushing yields near the lowest since June 2004, as a drop in the overnight call rates made buying debt cheaper.
Bond yields dipped as the rate, at which banks lend to each other in the overnight call money market, fell to 5.3% ��� the lowest in more than two weeks. Ten-year bonds are headed for the best year since 2001 as inflation slowed for a ninth week and the central bank slashed interest rates three times this quarter from a seven-year high. ���If you consider period from July to now, bonds have rallied almost 30% ��� that���s really amazing. Just that not many traders would have caught on to the entire rally,��� said a dealer with a domestic debt broking house. The yield on the 8.24% note due April 2018 decreased 7 bps points to 5.55%. The call-money rate closed at the lowest since December 11.
Banks borrowed only Rs 100 crore from at its two repo auctions while they parked a total of Rs 47,350 crore via the reverse-repo auction, the highest since December 5, reflecting comfortable cash conditions in the system.
The stock market, however, was very choppy, but shares snapped a four-day slide and rebounded 2.2% as investors bet that RBI would cut rates to boost sentiment. Government bonds rallied smartly, with the 10-years gaining, pushing yields near the lowest since June 2004, as a drop in the overnight call rates made buying debt cheaper.
Bond yields dipped as the rate, at which banks lend to each other in the overnight call money market, fell to 5.3% ��� the lowest in more than two weeks. Ten-year bonds are headed for the best year since 2001 as inflation slowed for a ninth week and the central bank slashed interest rates three times this quarter from a seven-year high. ���If you consider period from July to now, bonds have rallied almost 30% ��� that���s really amazing. Just that not many traders would have caught on to the entire rally,��� said a dealer with a domestic debt broking house. The yield on the 8.24% note due April 2018 decreased 7 bps points to 5.55%. The call-money rate closed at the lowest since December 11.
Banks borrowed only Rs 100 crore from at its two repo auctions while they parked a total of Rs 47,350 crore via the reverse-repo auction, the highest since December 5, reflecting comfortable cash conditions in the system.
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