I / Mumbai April 29, 2005The rupee rose on Friday to its highest in almost three months, supported by talk that China's Yuan might be revalued, robust foreign fund inflows and the previous day's surprise interest rate rise. The rupee closed at 43.53/$, up 0.4% from yesterday's close of 43.71.Call rates today tumbled to 1% at the overnight call money market here on the notified friday in the absence of adequate demand whilegovernment bonds were flat in thin dealings after higher inflation rates prevented a relief rally.Call rates opened higher at 5% following the overnight hike in reverse repo rate by 25 basis points to 5%, but later slipped to 1% towards the close in the absence of demand, as participants had already covered their reserve needs, dealers said.RBI accepted 41 bids for rs 27,650 crore at the 3 day fixed rate reverse repo auction today at 5%, under the liquidity adjustment facility.The secondary market for securties turned subdued after the overnight hyper activity and government bonds ended barely changed with minor changes either-way.An attempted relief-rally got arrested due to rising inflation rates amid concerns of interest rate uncertainties, dealers said.Benchmark 7.38% 2015 stock ended at Rs 101.05/10 a litte changed from thursday's close of Rs 101.05/08 with the yield at 7.23% but the actively traded 8.07% 2017 bond edged down to Rs 104.05/10 from Rs 104.13/18. The 6.65% 2009 bond inched up to Rs 100.00/10 from Rs 99.95/100.00 yesterday, the 7.55% 2010 stock firmed up to Rs 103.22/27 from Rs 103.15/25, the 9.39% 2011 gilt was barely changed at Rs 111.70/75 and the 6.85% 2012 paper firmed up to Rs 99.22/27 from Rs 99.15/20.The 7.50% 2034 bond was quoted at Rs 96.25/50. A mild relief rally after the overnight crash, which market operators believe was an over-reaction to the 25 basis point hike in the reverse repo rate to 5%, triggering speculation of possible interest rate increases, dealers said.Inflation remained at four month highs of 5.64% for the week ended April 16 from 5.48% in the previous week. Sentiments in the bond market remained distinctly weak even after the government said that it would lower its borrowing programme.At even rock-bottom levels, there is no genuine appetite for government papers, a treasury dealer said, adding the reverse repo rate rise signalled possible hardening of interest rates in the near-future.
