Dollar sales from the Reserve Bank of India rescued the rupee from weakening below the 46-mark on Thursday even amid strong dollar demand from oil companies and other importers, dealers said.
“Local shares ended down so there were some outflows from foreign institutional investors. There was also demand from oil companies in the market on Thursday ,” said a dealer with a private bank.
The Bombay Stock Exchange’s Sensex ended 3 per cent lower at 13570.31, while National Stock Exchange’s Nifty ended 2.3 per cent down at 4126.90.
The biggest intra-day surge ever in crude oil prices Monday also prompted banks to buy the greenback, dealers said. NYMEX crude oil prices rose over $16 per barrel in overnight trade, but ended at $109.37 per barrel. However, the rupee’s fall was limited around 45.90 per $1 as RBI stepped in to sell dollars.
| HITS AND MISSES Currency per dollar | |||
| Sep 22,2008 | Sep 23,2008 More From This Section | % change | |
| Korean Won | 1141.30 | 1149.35 | -0.71 |
| Indian Rupee | 45.45 | 45.74 | -0.64 |
| Singapore Dollar | 1.408 | 1.413 | -0.31 |
| Indonesian Rupiah | 9305.00 | 9325.00 | -0.21 |
| Japanese Yen | 105.510 | 105.540 | -0.03 |
| Hong Kong Dollar | 7.769 | 7.761 | 0.10 |
| Malaysian Ringgit | 3.416 | 3.410 | 0.18 |
| Taiwan Dollar | 32.01 | 31.93 | 0.26 |
| Thai Baht | 33.89 | 33.76 | 0.38 |
G-sec: High yields
In a blow to the bond market on Thursday , the government advanced its second-half borrowing for the current financial year 2008-09 (April-March) by announcing a Rs 10,000-crore auction scheduled for Friday. The government will auction 7.94 per cent, 2021 bond for Rs 6,000 crore and 8.28 per cent, 2032 bond for Rs 4,000 crore on Friday.
“Yields at the long-end of the curve will get hammered, though the reaction at the 10-year bond will be with yields rising 10-15 basis points,” said Piyush Wadhwa, senior vice-president, ICICI Securities Primary Dealership.
The most-traded 10-year bond 8.24 per cent, 2018 yield on Thursday ended at 8.38 per cent, up nearly 30 basis points on week.
Call money: Subdued demand
Call money rate ended down on Thursday despite fears liquidity may tighten because demand was subdued as most banks have met their reserve needs in the first week of the current Reporting Fortnight itself, dealers said.
One-day call rate ended at 12.00-12.30 per cent on Thursday compared with Monday’s closing of 14.00-14.50 per cent. CBLOs ended at a weighted average rate of 9.16 per cent on Thursday compared with Monday’s close of 9.12 per cent.
“Demand was not much on Thursday . It seems most banks have covered much of the reserves for the current Reporting Fortnight,” said a dealer at a state-run bank. According to some dealers, banks had also borrowed heavily since last week anticipating liquidity to tighten more in coming days due to the two-day strike by state-run banks.