MUMBAI: The rupee gained marginally by Wednesday afternoon, but was still trading near one-month lows as the dollar lost ground against the global majors and shares continued to trade choppy. The local currency traded at 48.48 against the dollar at 3pm, weaker than 48.56 close on Tuesday. The dollar index that tracks the dollar's strength against the six majors was down 0.1%.
A technical report by Alpari, a London based forex trading firm said that the immediate trend for USD/INR remains up and the momentum is strong. "Long positions above 48.25 with targets @ 49 & 50 in extension. Alternative scenario: Below 48.25 look for further downside with 47.75 & 47.5 as targets," they said in a report to clients.
Bonds are rallying strongly with dealers saying this week's auction could be one of the last big auctions for the first half of this fiscal, with lower US Treasury yields also aiding sentiment.
The most commonly traded bond - the five-year paper - traded higher with yield 7 basis points lower at 6.54%. The benchmark 10-year 6.05% paper saw only trades worth Rs 210 cr. When yields fall, prices rise.
"US yields are down and there is felling that this could be the last Rs 15,000 cr auction for the time being. There may not be any auction this week and auctions from here on may be smaller," said a dealer at ICICI Securities Primary Dealership.
Dealers say what will be watched most keenly is how the Fed will respond to a recent rise in Treasury debt yields. It is expected to announce a buy back of securities, the quantum of which will also move the market. However the upcoming national budget has kept traders edgy. Dealers say that its only after the budget that yields will take a definite direction.
