RBI To Sell Bonds Worth Rs 16,500 Crore Next Week

MUMBAI: The Reserve Bank of India (RBI) has announced sale of bonds worth Rs 16,500 crore next week, considering that the reversal of fund flows on account of allocations of the Reliance Power public offer has begun this week itself.

The inter-bank call money market saw very volatile movements on Friday. Call rates, which ended the day at 5.25%, had dipped to as low as 2% during the day, due to funds flowing on account of the Reliance IPO allocations.

However, given that this was a reporting fortnight, there was demand for funds from banks which saw call rates rising to over 8% levels during the day. While RBI’s liquidity adjustment facility mopped up excess funds worth Rs 10,300 crore through its reverse repo auction, it also infused Rs 33,075 crore into the system through its
repo operations.

Tight cash conditions led to the market belief that the Reserve Bank of India would announce lesser quantum of bonds to be auctioned under the market stabilisation route. However, after trading hours, the central bank has announced the sale of bonds under MSS for Rs 4,000 crore, for Thursday and bond sale of two other maturities for Rs 9,000 crore for Friday. It has also scheduled the auction for Rs 3,500 crore of treasury bills for Wednesday.

Meanwhile, bond yields dipped slightly, after the market picked up positive cues from a lower-than-expected fuel rate hike. The yield on the 10-year benchmark bond, the 7.99% paper maturing in 2017, ended the day at 7.50%, a notch below Thursday’s close of 7.51%. Concerns over inflationary pressures following an anticipated fuel price hike were allayed after the market learned that it will be a nominal hike, according to a dealer.

Recovering local stock markets and foreign inflows after the dollar lost ground internationally, helped the rupee rise slightly on Friday. The rupee ended the day at 39.35/36 against the dollar, up from Thursday’s close of 39.38/39.

The rupee opened at 39.37-levels and volumes on the market remained very low through the day. The dollar weakening against major international currencies resulted in a flow of foreign capital to the markets. The Sensex also gained more than 3% during the day, to end a three-day fall.

Rupee Rises From 2 Month Low On Stocks Rebound

MUMBAI: The rupee recovers slightly in tandem with local stocks after falling to a 2-month low on Tuesday, tracking the stock market which fell 11.5 per cent in opening deals, with dollar selling by exporters offering support.

At 11:15 am rupee at 39.665/675 per dollar, weaker than the previous finish of 39.555/56, but climbing from an intraday low of 39.78, its weakest since late November.

Shares pared opening losses of 11.5 per cent as trade resumed after the sharp opening falls had triggered an automatic halt.

Foreigners sold $1.4 billion worth of shares in the last three days of last week. In 2007, foreign funds bought a record $17.4 billion of stocks, and this was a key driver for the rupee's rise of more than 12 percent.

Rupee May Head Back To High, Watching RBI

MUMBAI: The rupee is seen up on Friday as gains in global stock markets may lift foreign buying of local shares, a key driver for the currency last year, but RBI intervention is expected to block sharp gains.

The partially convertible rupee ended at 39.285/295 per dollar on Thursday, a shade softer than Wednesday's close of 39.28/29 but within striking distance of a decade-high of 39.16 hit in November.

Reliance Power is set to raise up to $3 billion in an initial public offer next week, which would be India's biggest-ever IPO, and dealers expect a net of about $1 billion to flow in from foreign funds, which should boost the rupee.

US stocks continued to recover from a poor start to the year on Thursday, helped by assurances of further interest rate cuts by the Federal Reserve.