CALL MONEY
Call money rates ended lower as borrowers remained by and large absent on reporting Friday. Overnight rates opened at 8-8.10 per cent from its last close at 8-8.10 per cent, and eased below the eight per cent on account of poor demand coupled with expectation of enhanced liquidity due to inflows of Rs 3,500 crore on Saturday, when the second tranche of CRR takes effect. "Lenders were not willing to take fresh positions as they expect rates to be at higher levels next week on account of the Rs 5,000 crore bond auction on November 22," a dealer said. "The bond auction would suck out all the extra liquidity floating in the money market due to the CRR cut," a dealers noted. Participants avoid bidding for funds on alternate Fridays as they have to account their call borrowings for the purpose of CRR calculations. At close, call rates were quoted at 7.50-8 per cent.
FORECAST: Call rates seen at 7.25-7.50 per cent levels on Saturday.SPOT DOLLAR
The rupee ended slightly lower against the dollar on Friday. Opening the day at 43.38/3850 from its overnight close at 43.38/3850, the rupee was seen in a narrow range between of 43.3750 and 43.39. "There was good dollar sales in the early trades due to which the rupee firmed to 43.3750. Supplies, basically came from exporters and some foreign banks," said a dealer with a forex brokerage. However, last-minute demand from state-run banks pushed the Indian currency lower to end at 43.3850/39. "A few public sector banks were bidding on behalf of oil companies. Stray deals took place at 43.37 levels", dealers said. Cash/tom finished at 1/0.25 paise, cash/spot at 1.50/1.75 paise, and tom/spot at 1/1.25 paise. The Reserve Bank maintained its the reference rate for the dollar at 43.39 per dollar. The rupee closed at 70.16 per pound sterling and 44.71 to a euro.
FORECAST: Rupee seen firmer on Monday.
FORWARD PREMIUMS
Premiums ended steady on Friday. The six-month annualised premia finished unchanged at 4.84 per cent. Near-forwards closed a tad lower, while far forwards held their ground after firming in early trades. "There was paying pressure from some banks in the morning session, but hedging of export receivables neutralised this," a dealer said. November dollars were seen at 2.5/3 paise, December 18/18.5 paise while in the far forwards, April quoted at 90/91 paise and May 108/110 paise. "Easy call rates below 8 per cent levels aided the premiunms to remain steady," said a dealer. Forward premiums have tracked softer call rates and a steady spot-rupee at 43.39/40 levels this week. "I think forwards will hold current levels if interest from importers does not materialise... we are heading towards month-end and if call rates go higher next week after the Rs 5,000 crore bond auction, premiums could inch up", a dealer said.
FORECAST: Forward premiums seen holding steady on Monday.
GILTS
Bond prices eased moderately on Friday. The 11.99 per cent 2009 ended at Rs 103.19 (Rs 103.23), 12.32 per cent 2011 at Rs 104.33 (Rs 104.38/39), 12.40 per cent 2013 at Rs 104.61 (Rs 104.63) and 11.83 per cent 2014 at Rs 100.56 (Rs 100.60). Dealers said that bond prices fell by around 10-12 paise in the morning due to profit-booking. The prices rose on buying support from players, ending around 4-5 paise lower from the previous levels. "The bond auction next week has already been factored in by the traders. This has prevented undue volatility from hitting the market," a dealer at a brokerage said, adding: "Bond prices are likely to rule firm on Saturday since call rates are expected to be easy on account of Rs 3,500 crore flowing in from the CRR cut" he said. The RBI on Thursday said that it will re-issue the 12.30 per cent 2016 and 11.68 per cent 2006 for Rs 3,000 crore and Rs 2,000 crore respectively.
FORECAST: Bond prices may regain lost ground on Saturday.
(Compiled by Anurag Joshi)
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.