Biggest fall for rupee in 11 years
Mumbai: The rupee saw its biggest single-day fall in 11 years against the dollar on Thursday, as importers bought dollars following the greenback's sharp falls over the last few days and also on suspected intervention by the Reserve Bank of India (RBI).

The rupee fell 1.7 per cent to Rs43.76 a dollar at close. The decline was the biggest since March 1996.

The rupee had strengthened against the dollar mainly due to strains in liquidity. Banks were selling dollars to replenish rupee liquidity excessively drained after tax outflows around March 15.

Bonds: Bond prices remained volatile with banks preparing for the close of the financial year. Total traded volumes on the order-matching system were Rs2,000 crore (Rs1,310 crore). Dealers said prices initially rallied as banks were buying to improve yields.

The 8.07 per cent-10 year-2017 paper opened at Rs100.65 (7.97 per cent YTM) and closed at Rs100.65 (7.97 per cent YTM). The recently auctioned 6.65 per cent two-year-2009 paper opened at Rs97.45 (8.04 per cent YTM) and closed at Rs97.47 (8.03 per cent YTM).

Call rates: The buying of dollars by the RBI and to some extent government spending infused rupee liquidity into the banking system, causing the call rates to close at 10 per cent on Thursday.

The average weighted call rate yesterday was over 25 per cent.

The easing of call rates and liquidity conditions are expected to pull down the rupee further. Banks borrowed Rs17,865 crore from RBI's repo window at 7.5 per cent. On Wednesday, banks borrowed Rs27,395 crore from the central bank.

Dealers said banks are going long on dollars as the correction in the rupee's appreciation was expected and represented a trading opportunity. The RBI is believed to have purchased a total of $20 billion in the last four months ending February, said an analyst.

The Reserve Bank of India on Thursday lent Rs17,865 crore to banks through the repo window while the banks parked Rs40 crore under the reverse repo with the central bank. Call rates closed higher at 10-11 per cent against Wednesday's close at 7-9 per cent.

Reverse repo: In the first one-day reverse repo auction, the RBI received and accepted one bid for Rs30 crore. In the first one-day repo auction, it received and accepted 20 bids for Rs13,005 crore. In the second one-day reverse repo auction, it received and accepted one bid for Rs10 crore while in the second one-day repo auction, it received and accepted 12 bids for Rs4,860 crore. The CBLO market saw 399 trades aggregating Rs20,693.30 crore in the 5.77 per cent-8 per cent range.
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