Mid-East mess casts shadow

Government securities G-Secs prices turned volatile on Wednesday, ahead of US secretary of state Colin Powell8217;s presentation on Iraqi weapons to the United Nations Security Council, and after an overwhelming response to the Reserve Bank of India8217;s RBI repos auction. The 7.40 per cent 2012 opened at Rs 108.40, went lower to Rs 108.15 and finally recovered to close at Rs 108.55. Similarly, the 9.81 per cent 2013 opened at Rs 126.50, went lower to Rs 126.20 and finally closed higher at Rs 126.60.

At the repos auction, 34 bids for Rs 11,055 crore were received, all of which got accepted. This is the highest amount the central bank has accepted since January 6 when it absorbed Rs 15,860 crore.

Crude oil climbs

LONDON: World oil prices climbed on Wednesday ahead of a key speech by US Secretary of State Colin Powell aimed at convincing sceptics on the UN Security Council that crude producer Iraq is hiding weapons of mass destruction. In London, benchmark Brent crude for March delivery rose 57 cents to 31.66 a barrel, while US Light crude rose 52 cents to 34.10 a barrel. 8220;War is something that8217;s very much inevitable,8221; said Paul Bednarczyk, analyst at economic consultancy 4cast. Reuters

Liquidity was good this week given the strong forex inflows, which the central bank had been mopping up to arrest he rupee8217;s gain against the dollar in a bid to maintain export competitiveness.

It is feared that a war in the Gulf may trigger a surge in oil prices, fuelling inflation. In the forex market, dollar sales by state-run banks saw the rupee rally against the dollar. At close, the rupee was seen at 47.7475/ 7575 after hitting an intra-day high of 47.7300/ 7350. The rupee broke its winning streak on Wednesday due to heavy dollar short-covering by banks after rising by 13 paise on regular dollar inflows in five sessions between January 28 and February 3.