The Reserve Bank of India (RBI) accepted a single bid for Rs 2,500 crore at the refinance rate of 7 per cent. The single bid for Rs 25 crore received for Rs 25 crore at the daily reverse repo auction was not accepted by the RBI. "Players squared their positions ahead of the 4-year bond auction," a dealer said. The central bank is auctioning the 2004 bond for Rs 4,000 crore on Friday. There were also concerns due to the rupee's volatility in the forex market.
FORECAST: The rupee seen around 7.25-7.75 per cent on Friday.

spot dollar
The rupee ended at an all-time closing low of 44.90/91 on corporate demand on Thursday. The rupee opened at 44.78/79, weaker as compared to Wednesday's 44.77/78. "There was major corporate demand on expectations of the rupee sliding further against the dollar," eMecklai senior vice president KN Dey said. The rupee gradually declined on sustained demand from corporates and importers.The rupee touched an intra-day low of 44.92. "There was good dollar supplies from PSu banks. "SBI and others stepped into the market during the day, which led the rupee to recover some ground. In late after trades the rupee was quoted at 44.88/89. The rupee ended at 44.90/91. The RBI fixed its rate for the dollar at 44.82. Dealers said they saw a strong chance of the rupee breaching the 45 mark on Friday. Cash/spot and cash/tom ended at 0.50-0.75 paise, with tom/spot closing at 0.25-0.50 paise.
FORECAST: The rupee seen weaker on Friday.

Forward premiums
Premiums ended higher amid paying pressure from banks on Wednesday. "The forward premiums closely tracked a weak rupee to firm up during the day," a dealer with a forex brokerage said. The six month premium ended higher at an annualised 3.90 per cent from 3.81 per cent on Wednesday. July dollars ended at 4/5 paise, August at 18/19 paise, while in the far end, January closed at 90/91 paise and February at 104/105 paise. "There were concerns on the liquidity as the Centre announced a fresh bond auction of Rs 4,000 crore for July 21. Liquidity in the system, however, was good. Near forwards rose 1-2 paise, while far forwards by 3-4 paise. "There was paying notably in the one, three and six month maturities," a dealer said. In the money market, call rates ended higher at 7.5-8 per cent. The inflows during this month will be Rs 14,000 crore.
FORECAST: Premiums seen range-bound on Friday.

Gilts
Bond prices ended sharply lower on liquidity concerns on Thursday. "There were concerns about liquidity after the auction was announced," a primary dealer said. The Centre has announced auction of the 4-year paper for Rs 4,000 crore on July 21. Short and medium term bonds fell by 15-20 paise in the morning session, but eroded these gains in the afternoon session. The 11.90 per cent 2007 bond ended at Rs 105.90 from the previous close of Rs 106.35. "The sentiment has by and large panicky as call rates have ruled higher. The rupee was also volatile," a private bank dealer said. "The RBI announcement for auctioning 4-year paper was factored by the market," a dealer said. The Centre has targeted a gross borrowing programme of Rs 1,17,000 crore for the current fiscal.
FORECAST: Bond prices seen holding current levels on Friday.

-- (Compiled by Anurag Joshi)