Call Money
Call rates held at 9.25% levels on Wednesday. Opening the day at 9-9.25% from its last close at 9%, call rates went a shade higher to 10-10.15% levels "There was heavy demand for funds from banks and and as supply of funds was not sufficient, call rates went higher briefly during the day to 10-10.15%", a dealer said, adding: ". Supply was curtailed as major lending banks focussed their attention on the forex market as the rupee fell sharply to an intra-day low of 46.32/33". At close, it was quoted seen at 10-10.05%. The RBI rejected the single application for Rs 300 crore at its one-day repos and one application for Rs 400 crore at its five-day repos. The RBI also rejected five applications for Rs 600 crore at its one-day reverse repos auction. The total outstanding in repos stands at Rs 10,642 crore. The NSE pegged its Mibid and Mibor at 9.10% and 9.38% respectively.
FORECAST: Call rates seen perking up shade on Thursday; rupee holds key.Spot dollar
The rupee slid by 14 paise against the dollar on Wednesday. Opening the day at 46.21/23, lower from its last close at 46.17/18, the rupee went lower to 46.32/33. "Market sentiment was effected after the announcement of new credit policy by RBI... the restoration of exchange earners foreign currency (EEFC) has raised the fear of liquidity crunch in the market as exporters can now keep more money in their EEFC accounts",a dealer said, adding: Standard & Poors (S&Ps) revised rating also affected market sentiment and pushed down the rupee this morning". S&P's downgraded the country rating for long-term to "stable" from "positive", which affected market sentiments, which has been reporting negative reaction since announcement of mid-term monetary policy by the Reserve Bank. At close, the rupee was seen at Rs 46.27/28. The Reserve Bank pegged its reference rate for the dollar at 46.33 as against its last close Rs.46.13.
FORECAST: Rupee seen weaker on Thursday; may test 40.41/42 levels.
Forward premiums
Forward premiums rose a shade on Wednesday. Tracking the weak spot rupee at an intra-day low of 46.31/33, forward premiums rose on paying pressure. Near forwards moved up by 3-4 paise while far forwards rose by 8-10 paise. The sixth-month and one-year annualised forward premia closed higher at 4.52% (4.19%) and 4.40% (4.21%) respectively. "There was no positive response from the dealers about the new credit policy by Reserve Bank... the restoration of the EEFC account has lead to the fear of shortage of dollars... Call rates also firmed up in the morning on heavy demand for funds from banks on the back of the rupee's fall against the dollar", a dealer said. Cash/spot traded between 0.80/0.90 paise with cash/tom at 0.40/0.45 paise. October dollars quoted at 10.50/11 paise and in the far forwards, April quoted at 112/114 paise and May at 127/129 paise.
FORECAST: Premiums to inch up on Thursday.
Gilts
Bond prices fell on Wednesday. The 11.40 per cent 2008 was traded at Rs 100.05 with the 12.50 per cent 2004 at Rs 105.1600. "Bond prices fell after the rupee fell to an intra-day low of 46.33 levels in intra-day trades... the downgrade by Standard & Poors also affected the market", a dealer with a primary dealership said, adding: "On the whole, bond prices were depressed by 10 to 15 paise and trades were poor". On the National Stock Exchange's wholesale debt segment, trades worth Rs 1,280.59 crore were seen. Trades worth Rs 525 crore were seen in the 11.40 per cent 2008 at a weighted average yield of 11.43% with those in the 11.30 per cent 2010 at Rs 242 (11.64). Trades worth Rs 205 crore were seen in the 12.50% 2004 (10.74per cent).
FORECAST: Bond prices will fall on Thursday.
(Compiled by George Glace).
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