Re falls again, call rates remain high
With a slowdown in capital inflows and worries of investors pulling out of the market, the rupee weakened further against the dollar on Tuesday.
By TNN |
MUMBAI: With a slowdown in capital inflows and worries of investors pulling out of the market, the rupee weakened further against the dollar on Tuesday.
This is in spite of a strong performance by the Sensex, which ended the day with a 298-point gain, above the 19000-pt barrier. The rupee ended the day at 39.42/43 against the dollar, slipping further from Monday’s close of 39.36/37, and after the rupee had hit a near-decade high of 39.16 last week.
Movement in the rupee remained in a tight range throughout the day, and moved between the 39.36-39.44-bracket, after starting the day off at 39.38/40 levels. The Reserve Bank of India bought a record $11.87 billion in September, according to the latest data released on Tuesday.
RBI’s cumulative purcahses amounted to $35 billion since April and a rupee equivalent of Rs 1,40,867 crore. According to traders, there are worries in the market that some foreign investors may be pulling out, and the fact that there have been no significant inflows in the past few days has not helped the rupee’s cause either. Also, there have been weak cues from other Asian currencies and markets.
Rates on forward premia also took a hit, with the one-month contract slipping to 2.06% (2.23%). The six-month contract ended the day at 1.28% (1.52%) and the annual contract at 1.06%(1.17%).
The Reserve Bank of India was seen infusing funds to the tune of Rs 23,010 crore into the banking system through repo operations. At the same time, only one bid worth Rs 2,000 crore was placed under the reverse repo window by a bank, which was mopped up by the central bank.
Meanwhile, at the bond market, yields fell after there were signals of availability of cash surpluses with banks in the future, following the government’s decision to increase its spending. Yields on the 10-year bond ended at 7.89%, falling from Monday’s close of 7.92%. “The fact that there are no imminent negatives for the market has been bolstering the sentiment,” said a bond dealer with a private bank.
Treasury bills worth Rs 6,000 crore will be cautioned on Wednesday. Of which, Rs 5,000 crore will be issued under the market stabilisation scheme (MSS). This may further drain out cash from the system, dealers felt.
Inter-bank call rates continued to remain on the higher side for most of the day and touched a high of 8.50% for the day. The rates ended at 6.50% after transactions worth Rs 11,971 crore were carried out. The rates had opened at 7.75% and the low for the day was recorded at 6.20%.
This is in spite of a strong performance by the Sensex, which ended the day with a 298-point gain, above the 19000-pt barrier. The rupee ended the day at 39.42/43 against the dollar, slipping further from Monday’s close of 39.36/37, and after the rupee had hit a near-decade high of 39.16 last week.
Movement in the rupee remained in a tight range throughout the day, and moved between the 39.36-39.44-bracket, after starting the day off at 39.38/40 levels. The Reserve Bank of India bought a record $11.87 billion in September, according to the latest data released on Tuesday.
RBI’s cumulative purcahses amounted to $35 billion since April and a rupee equivalent of Rs 1,40,867 crore. According to traders, there are worries in the market that some foreign investors may be pulling out, and the fact that there have been no significant inflows in the past few days has not helped the rupee’s cause either. Also, there have been weak cues from other Asian currencies and markets.
Rates on forward premia also took a hit, with the one-month contract slipping to 2.06% (2.23%). The six-month contract ended the day at 1.28% (1.52%) and the annual contract at 1.06%(1.17%).
The Reserve Bank of India was seen infusing funds to the tune of Rs 23,010 crore into the banking system through repo operations. At the same time, only one bid worth Rs 2,000 crore was placed under the reverse repo window by a bank, which was mopped up by the central bank.
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Meanwhile, at the bond market, yields fell after there were signals of availability of cash surpluses with banks in the future, following the government’s decision to increase its spending. Yields on the 10-year bond ended at 7.89%, falling from Monday’s close of 7.92%. “The fact that there are no imminent negatives for the market has been bolstering the sentiment,” said a bond dealer with a private bank.
Treasury bills worth Rs 6,000 crore will be cautioned on Wednesday. Of which, Rs 5,000 crore will be issued under the market stabilisation scheme (MSS). This may further drain out cash from the system, dealers felt.
Inter-bank call rates continued to remain on the higher side for most of the day and touched a high of 8.50% for the day. The rates ended at 6.50% after transactions worth Rs 11,971 crore were carried out. The rates had opened at 7.75% and the low for the day was recorded at 6.20%.
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