Rupee slips to 39.84/85 vs dollar

MUMBAI: The rupee ended the day at 39.84/85 against the dollar, slipping from Thursday’s close of 39.71/72. Even though the local currency opened the day at 39.70/71 levels per dollar, significant intervention from the central bank saw it dip to 39.84 levels by evening.

RBI, which has been intervening in the forex market actively during the entire week, has announced auctions of bonds under the market stabilisation channel for Rs 7,000 crore next week. The central bank also announced the sale of Rs 6,000 crore worth of treasury bills.

On the forward market, there was a downward movement as premia on the one-month contract ended the day at 0.56% (1.53%). The premia on six-month contract also inched down to 0.77% (1.14%) and the annual contract ended the day at 0.95% (1.27%).

The bond market was hit by fears of a hike in reserve requirements, as there was a rumour about the meeting between RBI governor Dr YV Reddy and finance minister P Chidambaram.

The yield on the benchmark paper, the 7.99% bond maturing in 2017, ended at 7.90%, a tad lower than Thursday’s close of 7.91%. Volumes remained low as banks remained wary of making moves on the market.

Call rates too were extremely volatile, given that banks had to meet reserve requirements as it was a reporting on Friday. Rates on the call market rose to 9.50%, while a few stray deals were also reported at as low as 2.75%. The rates ended the day at 3.00% after transactions worth Rs 9,518 crore were struck. Earlier, the markets had opened to
8.75% levels.

Rates on the market for collateralised operations saw rates rising to 8.25% and few deals were even carried out at levels as low as 0.04% levels. The markets had opened at 7.25% and closed at 3.00%. Transactions worth Rs 28,958 crore were carried out on the CBLO option.

Repo borrowing rates ended the day at 7.00%, after deals worth Rs 13,569 crore were struck.
At the Reserve Bank’s liquidity adjustment facility (LAF) window, the central bank mopped up Rs 3,665 crore under reverse repo operations and infused Rs 9,735 crore into the system through the repo window.