Call money
Call money rates on Monday ended lower amid fresh infusion of funds through the reverse repo auction of the Reserve Bank of India (RBI). The overnight interest rates opened at 14-14.5 per cent as compared to Saturday's close of 12-14 per cent. The RBI fixed a cut-off rate of 13.5 per cent for its liquidity adjustment facility (LAF) through reverse repos. The RBI accepted 16 bids totalling Rs 1,350 crore. The central bank received 48 bids of Rs 3,550 crore for the reverse repo auction from banks and primary dealers eligible for the liquidity adjustment facility (LAF). ``The market was anticipating a lower cut-off rate than market expectations,'' a primary dealer said. Dealers said the rates ruled in a tight range on dull demand from players at the start of a new reporting period. "The call rates ruled at 14-15 per cent throughout the session, ending at the same levels," a dealer with a state-run bank said.
FORECAST: Call rates to move according to inflows from LAF onTuesday.Spot dollar
The rupee on Monday ended higher on renewed dollar sales by banks and exporters. The rupee opened at 44.69/71, unchanged from its previous closing level. Dealers said there was good supply of dollars from the SBI and some other PSU banks. The rupee touched a high of 44.6525, before closing at 44.6575/6650. "There were inward remittances also, particularly from the Gulf, which allowed the rupee to gain lost ground," a dealer with a forex brokerage said. Dealers said exporters felt 44.70 to be a good support level to offload, allowing the rupee to appreciate since last week. Banks offloaded their long dollar positions to raise funds to fund call borrowings. "Banks would not take the risk of keeping long dollar positions with the prevailing high overnight-carry cost," dealers said. Cash/spot ended at 2/2.75 paise, cash/tom at 1/1.50 paise and tom/spot at 1/1.5 paise. The RBI fixed its reference rate for the dollar at 44.69 (44.75).
FORECAST: The rupee seen firmer onTuesday.
Forward premiums
Premiums on Monday moved in a narrow range, ending marginally lower. The sixth-month annualised premium ended at 3.36 per cent from Friday's close of 3.43 per cent. The one-year premium ended at 3.28 per cent as against 3.38 per cent on Friday. June dollars ended at 8/9 paise, July at 23/25 paise, while in the far end December closed at 78/80 paise and January at 90/92 paise. At the inter-bank money market, call rates ruled at 14-15 per cent on good demand for funds and curtailed supply on the back of the advance tax outflows. Call rates closed at the same levels as against 12-14 per cent on Saturday. "There was good receivings in the one-, three- and six-month maturities," a dealer said.
FORECAST: Premiums seen range-bound on Tuesday.
Gilts
Gains in bond prices on Friday eroded after the RBI fixed a higher cut-off rate at its reverse repo auction. Bond prices declined by 5-10 paise in the short-end.
The 11.90 per cent 2007 bond fell to Rs 105.30in evening deals from the previous close of Rs 105.20. The bond touched an intra-day high of Rs 105.42. Dealers said the activity was largely concentrated in the short-end, with appetite for longer tenor bonds dried up among investors. "The rupee's gaining ground on Monday could not calm sentiments," a primary dealer said. "Traders are not sure what positions to take and at what levels," a dealer with a private bank said. "The RBI's current stance in the foreign exchange market has not helped sentiment either," he added. The government has a gross budgeted borrowing programme of Rs 1,17,000 crore for the current fiscal.
FORECAST: Bond prices seen range-bound on Tuesday.
Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.