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Call Money
The call money rates remained rangebound on Friday. The overnight rates opened at 9.25 per cent in the morning, unchanged from its previous closing level. Throughout the morning it remained at the same level but eased towards close due to lack of demand for funds by the bank.
It closed at 9 per cent-9.25 per cent. According to money market sources, most nationalised banks are artificially keeping the call rates much higher than the RBI repo level. "Most nationalised banks are not lending in the interbank market as most of them have exhausted their exposure limits," a money market dealer from a private sector bank said.
The outflow from the system via a three-day fixed rate repo was Rs 2,400 crore--same amount came back into the system through repo reversal on Friday. Currently, total funds in the repo is about Rs 7440 crore. According to market sources, call rates are expected to tighten after September 15. "Around Rs 5,000 crore is expected to flow out of the system by way of advancetax payment on September 15," a dealer said.
FORECAST: The call rates are seen in the 9-9.50 per cent band on Saturday.
Spot Dollar
The forex market was quite volatile on Friday. The rupee opened at 42.51/52 against the dollar, unchanged from its previous close. It remained steady throughout the morning at 42.52/53 level but weakened during the later part of the day against dollar to 42.56/57 due to the high general demand for dollar and the fact that SBI entered the market and bought dollars.
According to sources in the forex market, SBI was seen quoting between 42.56/57, however, towards the close it was quoting 42.57/58. The rupee finally closed at 42.56/57.
"The forex market was quite volatile in the later part of the day after RBI entered the market. Later in the day, SBI was quoting high as it wanted to sell," forex dealers said.
FORECAST: The rupee is seen between 42.52 and 42.55 on Saturday.
Forward Premiums
Forward premiums across all maturities fell by 5-6paise on Friday morning compared with their previous closes. However in the noon after SBI entered the market to buy dollars, the forward premiums across all maturity rose by 12-15 paise towards the close due to paying pressure by banks.
The six-month annualised premium quoted at 9.70 per cent (9.63 per cent), one-month (annualised) at 10 per cent and three-month (annualised) at 9.80 per cent (8.93 per cent). The September premium closed at 23/26 paise (22/24 paise), October at 60/63 paise (55/60 paise), November at 92/96 paise (86/91 paise), December at 127/130 paise (117/122 paise), January at 161/165 paise (152/157 paise), March at 225/232 paise (227/232 paise), April at 265/270 paise (266/271 paise), July at 381/386 paise (376/381 paise) and August at 415/422 paise (411/418 paise).
FORWARD: The six-month annualised forward premium is seen at 9.63-9.70 per cent on Saturday.
Gilts
A few primary dealers were seen selling short- to medium-term gilts on Friday in order to garnersufficient funds to take position on the double-bond auction slated on September 7. Selling pressure in short- and medium-term papers like 11.55 per cent 2001, 11.68 per cent 2002 paper and 11.78 per cent 2003 paper resulted in a fall in prices by 3 paise-5 paise level compared with its previous close.
The 11.55 per cent 2001 paper was traded at par (Rs 100.03 on Thursday) and the 11.78 per cent 2003 paper was also traded at par (Rs 100.03). According to money market dealers, some selling interest was also seen in 11.68 per cent 2002 paper which was also quoted at par. The wholesale debt market of NSE witnessed trades worth Rs 270.45 crore.
FORECAST: Gilt prices are expected to remain at Friday's closing level on Saturday.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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