The spot rupee ended higher at Rs 48.84 per USD as against its previous close of Rs 49.12.
The widely traded 8.24%, 2018 paper closed higher at Rs 119.03 as against its previous close of Rs 118.24.
Banking Editor, Latha Venkatesh’s comments on money market updtes on CNBC-TV18:
Another rally day for the bond markets that was primarily because the bond announcements made by the RBI yesterday were more in tune with the markets expectations or the markets desire, last week when the bond auctions were announced, the bond markets were massacred, the government has announced that it will borrow Rs 45,000 crore in the next few weeks, all that had decimated bonds and people didn’t want to hold bonds any more because of the huge supply expected but this time the RBI made it much more palatable for banks, in the first place they have announced two very liquid bonds, one 10 year and one 5 year and also the long 30 year kind of bonds which are not liquid kinds of bonds which are bought from insurers that has been reduced from an expected Rs 4,000 crore from an expected Rs 3,000 crore to a Rs 4,000 crore sale.
There has been an MSS buyback, so as bonds are being sold the government is also buying back or rather RBI is buying back Rs 3,000 crore of bonds keeping the bond supply not too adverse, all this has made the bond markets very buoyant but the bigger reason why the bond markets are cheering is because there is an expected petrol and diesel and possibly LPG price cut expected tomorrow and as it is the inflation number that will come tomorrow is expected to be close to 5.1-5.2 and add to this the fuel price cut by February you are probably looking at inflation number closer to 3%, so bonds are very buoyant.
The rupee market was relatively quiet but the rupee again was on the front foot and that’s partly because all the Asian currencies are on their front foot, equities was the big reason as equity markets in Asia as well as in India doing well made banks as well as corporates unwind their corporate dollar positions and at lower levels, oil companies were buying and it was not as it was a run away rally in the rupee but even going forward looks like the rupee will remain a slightly stronger currency viz the dollar considering the way in which oil and crude prices are falling. The Indian exports are not so commoditized, so that’s expected to continue to earn a better buck than the imports so rupee on a front foot.
