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Call
Money
Call rates opened sharply higher in early trade owing to strong
demand and tight supplies. Demand was was strong demand from
foreign and private banks amid limited supplies. Concerns
on the rupee front also put upward pressure on the call rates.
Panic gripped the market as the rupee crossed the 48 mark
for the first time ever. “Supplies were available but at a
higher price,” a primary dealer said. However, in intra-day
trade a large state-run bank, usually a main lender in the
call rate started lending around 7%. This move helped the
call rate ease to around its notional floor of 7%, the RBI’s
refinance rate. Call rates opened at 7.25-7.50% but stary
deals were also said to be have done around 7.75% levels.
Call rates closed at 7.10-7.25%. Elsewhere, the National Stock
Exchange (NSE) pegged its overnight Mibid and Mibor at 7.14%
and 7.37% respectively.
FORECAST: Call rates seen firm on Tuesday.
Spot Dollar
The rupee ended higher against the dollar in volatile
trade after large dollar sales by PSU banks in afternoon trade
due to unwinding of long dollar positions by other banks.
According to dealers supplies of dollars from the large PSU
banks may have been on behalf of the central bank. The rupee
rebound to end at 47.75 from an intra-day low of 48.43 seen
owing to dollar demand from banks, importers and foreign funds.
The rupee opened 47.8200. In early trade, PSU banks were offering
at higher levels but the dollar sales were not enough to control
the volatility. Unwinding of dollar positions in late trade
following the liquidation of long dollar by PSU banks helped
the rupee stabilise to end at 47.75. According to dealers
foreign funds and importers were major buyers of the dollar
Monday. The RBI fixed its reference rate for dollar at 48.18
as against its previous fix 47.70. In cross-currency trades,
the euro closed 44.28, while pound closed at 70.13.
FORECAST: The rupee seen weak on Tuesday.
Forward Premiums
Forward dollar rupee premium which had risen sharply
tracking the weak rupee, came off in late trades owing to
wide-spread receiving by banks after the spot rupee changed
direction. Premiums across all tenors came off as banks sold
forward dollars in late trade. Earlier in the day the premiums
across the board were under lot of pressure as importers continued
to cover their forward contracts while banks also sqaured
up forward dollar positions. Easy call rates also helped forward
dollar premium to reverse its rising trend seen over the past
few days. The call rates eased in late trade owing to improved
supplies. The benchmark six-month annualised premium closed
at 6.76% while the annualised one-year premium also closed
at 6.83%. In month-wise premiums, September dollar traded
at 10.5/11.5 paise, while in the far forwards, January dollar
traded at 125/130 paise with August dollar at 300/310 paise.
FORECAST: Forward premiums seen range-bound Tuesday.
Gilts
Gilt prices recovered after the Reserve Bank of
India announced that its wiill open a special window to purchase
select securities thorugh daily auction from Tuesday upto September
21. GoI-Secs prices had dropped by nearly Re 1-1.50 round the
weekend owing to weak sentiment following a weak spot rupee.
“Following the drop in the spot rupee value, there is still
lot of uncertainty in the market,” a dealer at a broking firm
said. The market has been surrounded by uncertainty after the
news of the terrorist attack in US on Tuesday. After remaining
range-bound for sometime GoI-Secs prices started dipping again
as the market became a bit uncertain of the future. Trade was
volatile with bargain-buying and profit-sales taking turns.
Gilt prices had been weakening over the past few days owing
to concerns over the rupee’s fall and overall economic uncertainty.
On the NSE’s wholesale debt segment, trades worth Rs 2,300 crore
were seen.
FORECAST: Prices seen range-bound Tuesday.
(Compiled by Srikesh P Menon)
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