The rupee closed at Rs. 127.95/128.05 against the greenback after opening at Rs. 128.55/60.
"We saw the rupee slip sharply against the US dollar over the past week or so after a small number of investors unwound their bond holdings on positive sentiments over the recovery of the US economy. This week, we did not see this happen. The rupee gained sharply against the dollar purely on market forces, the Central Bank did not intervene. It was a case of supply being more than demand," a currency dealer said.
The Central Bank sold over US$ 3 billion to keep the exchange rate stable from July 2011 to early February 2012, which together with low interest rates fuelled a balance of payments problem.
Treasury bill yields closed flat for the second consecutive week at yesterday’s primary auction.
The Public Debt Department of the Central Bank offered maturing bills amounting to Rs. 12 billion, attracting bids amounting to Rs. 30.2 billion. The bank accepted only Rs. 10.7 billion.
"The Central Bank was satisfied at borrowing lower than what was offered at these rates," a treasury dealer said.
The three-month yield closed one basis point lower from last week at 8.66 percent and the six and 12 month yields remained unchanged at 9.8 percent and 10.85 percent respectively.
Secondary market Treasury bond yields eased yesterday with the more liquid five year bond yield moving down to 11.20/22 percent from the previous day’s 11.27/29.
Excess rupee liquidity in the financial system amounted to Rs. 16 billion, down from Rs. 20.6 billion the previous day.