Call Money
Call rates ended sharply higher on the back of steady demand and tight supplies. A large state-run bank, usually the main lender in the call market was said to have hiked its rates and restricted supplies. “The main reason for call rates to rise is not strong demand, demand was relatively steady, but supplies were limited or available at a higher price,” a dealer at a private bank said. The call rate opened firm at 7.25-7.50% and rose sharply to 9.00%. Private and foreign banks were said to be the main borrowers while state-run banks were said to have made limited supplies. “Supplies in the call market were available but at a higher price,” a primary dealer said. Call rates opened at 7.25-7.50% but stary deals were also said to be have done around 9.25% levels. Call rates closed at 8.50-8.75%. Elsewhere, the National Stock Exchange (NSE) pegged its overnight Mibid and Mibor at 7.54% and 7.87% respectively.
FORECAST: Call rates seen firm on Friday.

Spot Dollar
The rupee ended higher due to long dollar liquidation by banks after state-run banks sold dollars at higher levels. Banks also unwound their long positions owing to a rise in the call rate. The rupee opened at 48.00 level and slipped to 48.09 levels in early trade as dollar demand remained strong. However, further depreciation in the rupee was prevented as large state-run banks sold dollars and capped a further fall in the rupee. The unwinding of long dollar positions by other players aided the rupee’s rise in afternoon trade. The consistent dollar sales helped the rupee end stronger end stronger against the dollar. The rupee opened at 48.00, the intra-day low was 48.09 while the intra-day high was 47.9250. The rupee closed at 47.98/00. Meanwhile, the RBI fixed its reference rate for the dollar at 48.06 as against its previous fix 48.18. In cross-currency trades, the euro closed at 44.35, while the pound-sterling closed at 70.20.
FORECAST: The rupee seen under pressure on Friday.

Forward Premiums
Forward dollar premium opened higher on the back of a firm call rate and a weak spot rupee. Banks bought forward dollars across all tenors. The forwards market was choppy through out the day as premiums tracked the movement in spot rupee and the call rate. In afternoon trade premiums shot up sharply after the call was dealt at as high as 8.75-9.00%. Premiums came off a tad in late trade due to a recovery in the spot rupee. Premiums also weakened owing to sentiment on near-term liquidity improving due to Reserve Bank ofIndia’s open market operations. The benchmark six-month annualised premium closed at 6.76% while the annualised one-year premium also closed at 6.90%. In month-wise premiums, September dollar traded at 5/6 paise, while in the far forwards, January dollar traded at 120/124 paise with August dollar at 300/305 paise.
FORECAST: Forward premiums seen firm Friday.

Gilts
Gilt prices weakened owing to profit-sales. Firm call rates dampened the market sentiment prompting market players to off-load. Foreign banks were said to selling to book profits at the higher end. “Profit-sales on the back of high call and also uncertainty in regards to US retaliatory moves also kept the market sentiment negative,” a dealer at a broking firm said. Government securities prices had risen over the past few days as market sentiment improved after the RBI announcement of a special window to purchase select securities thorugh daily auction from Tuesday upto September 21. Early Thursday trade was volatile with bargain-buying and profit-sales taking turns. Traded volmues also were relatively low over the past few days. On the NSE’s wholesale debt segment, trades worth Rs 1,821 crore were seen. Trades worth Rs 270 crore were seen in 11.50% 2011A paper and 11.40% 2008 amounted to Rs 535 crore.
FORECAST: Prices seen weak Friday.

(Compiled by Srikesh P Menon)