Rupee strengthens further

MARKETS REPORT

Forex market

Outlook:
Traders expect the rupee to open at 44.78/80 levels, depending upon the yen movement.

Sentiment: Bearish

The rupee strengthened for the third straight session on Thursday and touched a 12-week high in intra-day trade, on the back of foreign fund inflows and dollar's broad losses against other Asian currencies.

The currency opened with a gap at 44.73/74 levels and there was selling witnessed at these levels. It strengthened to 44.63 levels before closing at 44.71 levels.

Forwards marked a significant rise as the six-month premium ended at 1.28 per cent, while the 12-month premium closed at 0.99 per cent.

Money market

Sentiment: Bullish

Gilt prices opened 6-10 paise higher compared with Wednesday's closing levels. Dealers attributed this to the auction announcement made by the RBI on Wednesday.

Traders expect the Rs 10,000 crore auction, slated early next week, to be well bid.

The yield on the 8.07 percent 11-year bond eased to 7.1803 per cent from Wednesday's 7.1861 percent close.

Traders foresee participants squaring up of positions on account of the reporting Friday.

Liquidity showed signs of improvement as the call rate hovered in a near-normal band of 5.5/5.6 per cent.

The RBI mopped up bids worth Rs 500 crore through the morning reverse repo auction and absorbed bids worth Rs 2,855 crore under its second liquidity adjustment facility.