Call money
Call money rates ended easier on Tuesday amid waning demand for funds close to the reporting Friday and an increase in supplies. The overnight interest rates opened at 10-10.5 paise as compared to the previous close of 9.75-10%. "Supplies also seem to be higher. It could be either on account of the forex market intervention through state-run banks or because the government must be spending somewhere," a dealer with a private bank said. Dollar supplies in the past two weeks were heavier than normal, most of which were absorbed by state-run banks. Call rates ended at 9.75-10 %. "There was less demand for funds since the market in the second week of this reporting period. The next reporting Friday falls on March 10. Call rates have remained above 9% since the start of this month, with liquidity hit by outflows towards the RBI open market operations.
FORECAST: Call rates seen above 9 per cent on Wednesday.Spot dollar
The rupee ended steady on Tuesday amid light dollar purchases by the SBI in morning trade. The rupee opened at 43.57/5775 as compared to the previous close of 43.565/57. "The supplies were good which took care of the demand from the SBI and another state-run bank," a dealer in a large foreign bank said. The rupee ended at 43.57/5750. Cash/spot ended at 1/1.25 paise, with cash/tom and tom/spot closing at 0.5/0.75 paise each. Dealers said the rupee firmed to an intra-day high of 43.56 during the early part of trading but eased on dollar demand from large state-run banks. "Trading was mostly range-bound, with dollar sales by foreign banks being absorbed by state-run banks," a dealer with a forex brokerage said. The RBI maintained the reference rate for the US dollar at 43.57 on Tuesday.
FORECAST: The rupee seen moving in a narrow range on Wednesday.
Forward premiums
Forward premiums tracked the call money rates for most part of Tuesday. The premiums rose slightly at the fag end after dipping in afternoontrades. The six month forward premium ended at an annualised 3.58 per cent on Tuesday as compared to 3.42 per cent in the previous session. The premiums rose in the morning after call money rates opened firmer. Call rates opened at 10-10.50 per cent before increased supplies saw rates close at 9.75-10 per cent. "A large corporate was paying six and 12 months premia probably to service its foreign currency loan," a dealer in a state-run bank said.
In the near maturities, March dollars ended at 14/15 paise, April at 28/29 paise, while among the far forwards, September ended at 84/85 paise and October at 95/96 paise.
FORECAST: Premiums seen higher on Wednesday.
Gilts
Bond prices were range-bound on Tuesday, with trades taking place in a 10-15 paise range. Dealers said there was a lack of trading interest among players. Some of the smaller players were, however, dealing small amounts in select maturities, they said. "The market is going to be directionless.
There is no reason to sell at such low levels and why should anyone buy when the interest rate outlook is still not clear," a dealer with a state-run bank said. The 11.83 per cent 2014 bond ended at Rs 106, unchanged from Monday closing levels and compared with the morning's Rs 106.05. The 12.5 per cent 2004 bond was steady at Rs 107.17. Dealers said net inflows of 1,200 crore during the week from bond coupon flows and treasury bill redemptions will help call rates ease further, but buying in bonds will be lacklustre.
FORECAST: Bond prices seen slightly higher on Wednesday.
-- (Compiled by Anurag Joshi)
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