Call Money
Call rates ended sharply lower at the money market here on Friday due to limited demand for funds, as most players had covered their reserve needs for the two-week reporting cycle. Call rates closed around 8.5-9 per cent, lower from Thursday's close of 13.75-14 per cent owing to receding demand for funds, as most banks had covered their reserve needs earlier. Three-day money was traded around 11.5-12.5 per cent. Call rates opened relatively firm around 14-14.25 per cent, tracking the RBI's cut-off rate of 14.5 per cent at its Thursday's one-day repo sale, dealers said. Banks report their reserve position to the RBI alternate Friday and keep 8.5 per cent in the form of CRR for the next trading cycle. The secondary market for securities ruled steady in thin volumes, but bonds rallied mildly after a RBI official said that the bank was not contemplating rate hike.
FORECAST: Call rates seen at 12-13.5 per cent levels on Saturday.Spot dollar
The rupee gained a shade to close at 45.87/88 on Friday. Opening at 45.94/96, from overnight at 45.91/93, the rupee went to intra-day low of 45.96/97 but recovered close of trades. "The rupee came under slight pressure in early trades... but it recovered soon on dollar selling by banks coupled with good dollar supplies and continued its uptrend till mid-session, when it quoted at 45.88/90", a dealer with a forex brokerage said. Inflows of around $1 bn were bought in by corporates after the RBI directive to unwind 50% of the EEFC accounts. This inflow is now estimated at much lower, but $200-$400 million as exporters who sold their dollars in the spot market also hedged their import needs through forward contracts. "The rupee may continue its firm trend during the day, but it may come under pressure due to month-end demand", a bank dealer said. The RBI rate for dollar was at 45.89.
FORECAST: Rupee seen holding current levels on Monday; may even gain a shade.
Forward premiums
Forward premiums opened higher on Friday, but were seen almost at their overnight levels by close of trades. The six-month annualised forward premia quoted at 5.24 per cent (5.1 per cent). August dollars closed at 2/3 paise (3/4 paise) with September unchanged at 27/29 paise while in the far forwards, April dollars closed at 148/151 paise (144/1466paise), May at 162//165 paise (162/164 paise) and June at 180/183 paise (178/180 paise). "There was some paying, but it was a dull day compared to what happened over the week", a dealer with a forex brokerage said. Foreign funds have made net purchases of equity worth $306.9 million in August after combined net sales of nearly $550 million in June and July. The country's balance of payments is also expected to be square in 2000/01 (April-March) after four years of surplus. It showed a $6.4 billion surplus in 1999/2000.
FORECAST: Premiums seen holding steady on Friday.
Gilts
Bond prices gained on Friday. The 12.5 per cent 2004 was seen at Rs 104.70 (Rs 104.40) with the 11.15 per cent 2002 at Rs 100.51 (Rs 100.30). Trading interest continued to be restricted to near-term dated-stocks. Call rates closed at 9.50-9.75 per cent on reporting Friday, but this did not have any affect on bond prices or the fact that the the Reserve Bank mopped up over 7,000 crore from the system through its repos-auction. "Bond prices tracked a stronger spot-rupee... The Reserve Bank's statement that it is not considering any measures also lent bouyancy to bond prices", a dealer with a primary dealership said, adding: "It was a good day for bond-trades. Prices were bearish in the morning, but that all changed with the Reserve Bank statement". Bond prices have been affected after the weakness in the spot-rupee.
FORECAST: Bond prices seen holding dipping on Friday.
(Compiled by Raghu Mohan)
Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.