Rupee ends at 9-year high

MONEY MARKET ROUND-UP

The rupee closed at a new 9-year high at Rs 40.27 per dollar from Monday's Rs 40.29. The rupee had touched a high of Rs 40.20 in intra-day trade.

Strong FII inflows continue to support the rupee even as the RBI was seen buying dollars through public sector banks to check the currency from rising sharply. The RBI bought $23.4 billion during January-May 2007. FII inflows have crossed $10 billion in 2007 so far.

CALL MONEY
Calls stay below 1%

Liquidity continued to be easy with the overnight call rate remaining below 1 per cent level. Call money was traded in a range of 0.20-0.50%. The weighted average call rate was 0.27%.

Call money volume was over Rs 12,200 crore, which was half of CBLO trades. CBLO rate closed at 0.06% but the weighted average rate was 0.02%.

GOVERNMENT BOND
Gilts end higher

Government bond yields snapped two-day fall on profit taking on expectations of likelihood of the RBI draining excess cash from the banking system.

The RBI will undertake quarterly review of its monetary policy on July 31.

The yield on the 10-year bond closed at 7.77 per cent against 7.75 per cent on Monday.

The National Stock Exchange reported Rs 8,544 crore of trading volume in government securities.

DERIVATIVES
Overnight swaps rise

The overnight indexed swaps rose sharply following rise in yields in the government bond market on expectations that the central bank would take measures to lift overnight rates. The five-year overnight indexed swap traded at 7.30 per cent against 7.21 per cent on Monday.

INTERNATIONAL
Sub-prime woes hit dollar

Dollar weakened against the euro and other most traded currencies on fears that sub-prime mortgage losses will rise, which in turn could slow growth of the US economy.

Dollar was at $1.3835 per euro in early trade in New York against $1.3807 on Monday. The US currency touched 120.41 against the yen, down from 121.09.