However, comfortable rupee liquidity led the six-month and one-year forwards to close at 1.48 per cent and 1.60 per cent, respectively. G-secs: Prices slide Volatility in the equity market led the foreign banks to sell government securities for arranging dollars so as to meet the demand from portfolio investors. Even though the market opened strong, the prices of government securities fell by 30-40 paise across maturities. The yield on the ten-year benchmark paper closed higher at 7.93 per cent as against a closing of 7.91 per cent on Wednesday. |
The market was also cautious on liquidity since the RBI will be auctioning two papers "� 7.27 per cent 2013 and 7.99 per cent 2017 for a total of Rs 7,000 crore. |
Money: Dollar demand soars Liquidity remained comfortable but the outlook continued to remain bearish. Dealers are of the view that if there is a large sell-off in the equity market leading to heavy dollar demand, the liquidity in the market may fall short of the demand. |
The RBI absorbed around Rs 16,000 crore from the market as against high of Rs 40,000-50,000 crore seen when the RBI lifted the cap on reverse repo bids. |
Call rates closed higher at 6.35 per cent whereas the banks could borrow funds in the collateralised lending and borrowing market at 6.10 per cent. OIS and corporate bonds: Short-term rates spike High volatility in the government securities and forex markets led to a volatile swap market where banks were busy hedging their floating rate portfolio. The five-year and one-year overnight swap rates closed at 7.5250 per cent and 7.50 per cent as against 7.5150 per cent and 7.4950 per cent on Wednesday. |
The corporate bond markets witnessed sharp hike in the short-term rates rendering the yield curve in the corporate bond market flat. While one"�year money could be raised at 9.50 per cent, 10-year funds are available for 9.80 per cent. |
Dealers explained that the hike in the the short-term rate primarily reflects the bearish outlook on liquidity in the short-term of three to six months. There were no major primary issues either in short-term or long-term bonds market, said a dealer. |
Global market: BoJ rates unchanged Bank of Japan kept the key rates unchanged even as the central bank governor warned that leaving rates unchanged may fuel risky investments and asset bubbles since the global investors are borrowing cheap in yen and investing in risky assets for higher returns. |
This may result in default from less credit worthy assets. |
The pound and the euro appreciated against the dollar and ruled around $2.0070 ($1.9878 ) and $1.3571 ($$1.3490), respectively. The yen is around $116.55 ($115). |