The rupee closed at Rs. 132.20/40 against the greenback yesterday after opening at Rs. 132.00/10.
"We saw some import demand and repatriation of dividends and royalties. Some export sectors are showing interest in converting their dollar holding as well. Overall volumes in the market are quite healthy from what they were a few weeks ago," one currency dealer said.
Meanwhile, benchmark Treasury bill yields eased across the shorter tenures at yesterday’s auction with investors hoping to convert their short term holdings to longer term bonds, currency dealers said.
"Generally, the market is expecting interest rates to ease at some point, but for now it is holding on to the higher end," a dealer said.
The Central Bank offered Rs. 30 billion in maturing Treasury bills which attracted bids amounting to Rs. 78.13 billion. The bank accepted bids amounting to Rs. 31.62 billion.
The three month bill saw its yield fall to 11.01 percent from 11.58 percent a week earlier, while the yield on the six month bill fell to 12.29 percent from 12.32 percent.
The one year bill saw its yield increase by 10 basis points from a week earlier to 12.60 percent.
The overnight call money market rate for interbank borrowings without security was 9.91 percent yesterday, while the repo market rate for interbank borrowings backed by security was 7.23 percent.
In recent weeks, the Central Bank has been particularly active in the market conducting repo auctions to absorb excess liquidity from the system. Yesterday, around Rs. 22.6 billion was absorbed from the banking system.