Call money
Call rates inched up to 13.50% on Tuesday. Opening the day at 11.95-12% from its last close at 12-13%. "The inter-bank market witnessed very dull activity coupled with comfortable liquidity. At the fag end of the session, call rates eased marginally and closed slightly lower at 12.25-12.50%", a dealer with a primary dealership said. The RBI accepted five bids for Rs 510 crore at its reverse repos auction, setting the cut-off price at 12.60 per cent. In all, the Reserve Bank received 22 bids for Rs 1,375 crore at the reverse repos auction. Demand for funds remained low as most players already covered their positions ahead of reporting Friday this week. According to the Reserve Bank's figures, total borrowings in the call market totalled Rs 12,765 crore (Rs 8,877 crore) with aggregate lendings at Rs 5,732 crore (Rs 6,160 crore).
FORECAST: Call rates seen at 12.50 per cent levels on Wednesday.Spot dollar
The rupee gained to 44.63 as corporates entered into sell-buy swaps. Opening at 44.66/67 from its close at 44.6525/66, the rupee eased by about two paise to 44.67/6825 by noon. "The market saw some month-end dollar demand coupled with lower supply, which put pressure on the rupee in the morning", a forex dealer said. Later in the day. corporates were seen selling the spot-dollar and buying forward as the last day for unwinding forwards was Tuesday. "Quite a few corporates that had booked one-month forward when the rupee came under pressure in late May unwound today .Today's spot-date matures on Thursday, and Friday is a holiday. So companies cancelled, and rebooked forwards today", e-Mecklai's, KN Dey, said. At close, the rupee was at 44.63/64. Elsewhere, the RBI fixed its rate for the dollar at 44.67 against its previous fix at 44.65.
FORECAST: Rupee seen at 44.67 levels on Wednesday.
Forward premiums
Forwards rose a tad on Tuesday. The six-month annualised forward cover quoted at 3.65 per cent (3.29 per cent). July dollars closed at 18/19 paise (16/17 paise) while in the far end December closed at 79/81 paise (71/73 paise) with January at 91/93 paise (85/86 paise). "Call rates had no impact on the forwards, but roll-over of forward contracts pushed up premiums", a dealer with a US-based bank said. corporates were seen selling the spot-dollar and buying forward as the last day for unwinding forwards was Tuesday. "Quite a few corporates that had booked one-month forward when the rupee came under pressure in late May unwound positions today... today's spot-date matures on the 29 of this month, and the next day is a Reserve bank holiday. So corporates cancelled, and rebooked forwards today", e-Mecklai's, KN Dey, said.
FORECAST: Premiums seen softening on Wednesday.
Gilts
Bond prices rule flat on Tuesday. The 11.90 per cent 2007 was seen at Rs 105.60/63 after quoting Rs 105.67 earlier in the day. On Monday, this bond has at Rs 105.70, off highs of Rs 105.75. "Trades were dull, and bond prices moved in a narrow range", a bond trader with a European bank said. The 12.50 per cent 2007 was dealt at Rs 107.25/28 at close with the 11.55 per cent 2001 at Rs 101.67/69. The 11.40 per cent 2000 was quoted at Rs 100.23/30 with the 11.19 per cent 2005 at Rs 103.43/48. "Call rates at 13 per cent levels did not have much of an impact on bond prices... basically liquidity is a bit tight and their is a cautious mood, said a dealer, adding: "Next month, we will see inflows of Rs 16,000 crore via bond redemptions and coupon payments".
FORECAST: Bond prices seen range-bound on Wednesday.
-- (Compiled by Raghu Mohan)
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