Re closes strong, bond yields fall
Heavy inflows of overseas capital, coupled with gains in the stock market, pushed the rupee up on Monday, raising hopes of a further rise during the week. The rupee ended the day at 39.49/50 against the dollar, strengthening from Friday’s close of...
By TNN |
MUMBAI: Heavy inflows of overseas capital, coupled with gains in the stock market, pushed the rupee up on Monday, raising hopes of a further rise during the week. The rupee ended the day at 39.49/50 against the dollar, strengthening from Friday’s close of 39.62/63.
The fact that the central bank stayed away from the market also allowed the rupee to rise, after starting the day at 39.63/65 levels. It is being widely speculated that the US Federal Reserve will cut rates, which will result in further flow of capital to economies such as India. Forward premia also saw a slight rise; the one-month contract ended the day at 1.54% (1.43%). The six-month contract also slipped to 1.17% (1.03%) and the annual contract ended the day at 0.95% (0.85%).
Meanwhile, easing of global oil prices and hopes of the Fed rate cut pushed bond yields down. Yields on the 10-year benchmark bond ended at 7.88% slipping from Friday’s close of 7.91%. The dip in global crude oil prices could signal a dip in fuel prices as well as inflation. This will result in government keeping key rates unchanged, a dealer from a bank said.
On the Reserve Bank of India’s liquidity adjustment facility, no bids were placed for the reverse repo auction. The central bank infused Rs 10 crore to the banking system through its repo auction. This is substantially lower than the previous amounts that were infused by the repo auctions in the past few weeks, and could signal a stabilisation of the liquidity scenario, said a bond dealer. However, there are treasury bill auctions worth Rs 4,000 crore scheduled for Wednesday. Also, advance tax payouts could take a toll on liquidity.
Rates on the inter-bank call market continued to remain high, touching the 7.8%-mark. The rates ended the day at 7.70%, after transactions worth Rs 9,153 crore were made. Call rates opened at the 7.70% level. Repo borrowing rates ended the day at 7.67%, after deals worth Rs 15,498 crore were struck.
Earlier, the rates had opened at 7.70%, and rose to an intra-day high of 7.75%. Collateralised borrowing rates ended the day at 7.32%. The markets had opened at 7.50% and rose to an intra-day high of 7.80%. Transactions worth Rs 40,069 crore were carried out on the CBLO option.
The fact that the central bank stayed away from the market also allowed the rupee to rise, after starting the day at 39.63/65 levels. It is being widely speculated that the US Federal Reserve will cut rates, which will result in further flow of capital to economies such as India. Forward premia also saw a slight rise; the one-month contract ended the day at 1.54% (1.43%). The six-month contract also slipped to 1.17% (1.03%) and the annual contract ended the day at 0.95% (0.85%).
Meanwhile, easing of global oil prices and hopes of the Fed rate cut pushed bond yields down. Yields on the 10-year benchmark bond ended at 7.88% slipping from Friday’s close of 7.91%. The dip in global crude oil prices could signal a dip in fuel prices as well as inflation. This will result in government keeping key rates unchanged, a dealer from a bank said.
On the Reserve Bank of India’s liquidity adjustment facility, no bids were placed for the reverse repo auction. The central bank infused Rs 10 crore to the banking system through its repo auction. This is substantially lower than the previous amounts that were infused by the repo auctions in the past few weeks, and could signal a stabilisation of the liquidity scenario, said a bond dealer. However, there are treasury bill auctions worth Rs 4,000 crore scheduled for Wednesday. Also, advance tax payouts could take a toll on liquidity.
Rates on the inter-bank call market continued to remain high, touching the 7.8%-mark. The rates ended the day at 7.70%, after transactions worth Rs 9,153 crore were made. Call rates opened at the 7.70% level. Repo borrowing rates ended the day at 7.67%, after deals worth Rs 15,498 crore were struck.
Earlier, the rates had opened at 7.70%, and rose to an intra-day high of 7.75%. Collateralised borrowing rates ended the day at 7.32%. The markets had opened at 7.50% and rose to an intra-day high of 7.80%. Transactions worth Rs 40,069 crore were carried out on the CBLO option.
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