MUMBAI: Cues from Asian markets and indications of recession in the US caused the rupee to marginally lose ground against the dollar on Wednesday, despite huge foreign fund inflows. The rupee ended the day at 39.29/30 against the dollar, slipping from Tuesday’s close of 39.26/27.
The Sensex fell for a second consecutive day, hampering sentiment for the local unit. Other Asian indices were affected by Citigroup reporting a huge loss, raising fears of the US going into a recession.
However, the effect of foreign funds which continued to flow in for the upcoming IPOs was quickly cancelled out by the central bank which intervened by buying dollars through nationalised banks.
Forward premia on the one-month contract rose to 2.34% (2.21%) while rates on the six-month contract slipped to 2.08% (2.11%) and the annual contract ended the day at 1.74% (1.78%).
Meanwhile, inflationary concerns stemming from a possible fuel price hike pushed bond yields up. The yield on the 10-year benchmark bond ended the day at 7.56%, a notch above Tuesday’s close of 7.55%. Yields have also been pushed up by fresh supplies, with the excess liquidity in the system prompting the central bank to issue market stabilisation scheme (MSS) bonds after a gap of six weeks.
Treasury bills of two different maturities worth Rs 6,500 crore were auctioned by the Reserve Bank of India (RBI) on Wednesday, of which Rs 5,000 crore was the MSS component.
A cut-off yield of 7.10% was announced on the 91-day T-bill and a yield of 7.38% was announced on the 364-day bill. The central bank will auction a further Rs 4,000 crore of MSS bonds on Thursday.
The Sensex fell for a second consecutive day, hampering sentiment for the local unit. Other Asian indices were affected by Citigroup reporting a huge loss, raising fears of the US going into a recession.
However, the effect of foreign funds which continued to flow in for the upcoming IPOs was quickly cancelled out by the central bank which intervened by buying dollars through nationalised banks.
Forward premia on the one-month contract rose to 2.34% (2.21%) while rates on the six-month contract slipped to 2.08% (2.11%) and the annual contract ended the day at 1.74% (1.78%).
Meanwhile, inflationary concerns stemming from a possible fuel price hike pushed bond yields up. The yield on the 10-year benchmark bond ended the day at 7.56%, a notch above Tuesday’s close of 7.55%. Yields have also been pushed up by fresh supplies, with the excess liquidity in the system prompting the central bank to issue market stabilisation scheme (MSS) bonds after a gap of six weeks.
Treasury bills of two different maturities worth Rs 6,500 crore were auctioned by the Reserve Bank of India (RBI) on Wednesday, of which Rs 5,000 crore was the MSS component.
A cut-off yield of 7.10% was announced on the 91-day T-bill and a yield of 7.38% was announced on the 364-day bill. The central bank will auction a further Rs 4,000 crore of MSS bonds on Thursday.
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