Opening the day at 4.50-4.60%, call rates spiked to 4.85% in intra-day trades before closing nearer to its opening quote at 4.50-4.60%. Call rates perked because of the fact that end-September is a bank holiday. Then there is October 2 and maturing $5.5 billion Resurgent India Bonds (RIB). Therefore, there was covering interest for cash reserve ratio even in the early part of the reporting fortnight, a dealer with a private bank said, adding that advance tax outflows are also a factor. The Reserve Bank of Indias (RBI) forward contracts maturing at the end of September will inject some Rs 20,000 crore into the system. At its one-day repos auction held today, the RBI received 15 bids for Rs 16,330 crore, but accepted only a partial amount of Rs 8,167 crore. Meanwhile, the National Stock Exchange pegged its overnight Mibid and Mibor at 4.53% and 4.64% respectively.
FORECAST: Call rates seen closer to 4.80% levels on Wednesday.
The rupee closed a tad lower against the dollar at 45.80/81. It held steady but then corporates interest for dollars came in. There was dollar covering ahead of the month-end at a comfortable level, a dealer said. Opening the day at 45.73/76, the rupee gained to 45.71 in early trades. It could not sustain that level and moved southwards after importers rushed to cover their month-end dollars. Some state-run banks were also seen buying dollars heavily around 45.7050 level. But it could not be confirmed whether they were buying on behalf of their corporate clients or for the central bank. The rupee staged a dramatic rally on Monday, joining the global currency party after the weekend group of seven called for flexible currency regimes. However, the rupee failed to breach the 45.70-level. The RBI fixed its reference rate for the dollar at 45.75, four paise lower than Mondays fix of 45.79.
FORECAST: Rupee seen testing 45.80 levels on Wednesday.
Forward premium tracked the slip in the spot-rupee and inched higher on fresh paying interest. The six-month annualised forward premium closed higher at 0.95 per cent as compared to the overnight 0.83 per cent. Cash/spot and cash/tom closed at 0.90-1.10 paise and 0.45-0.55 paise respectively. The month-wise premium in paise were: September 2.5-3.5, October 1.5/3.5, November 5/7, December 8/10, January 13/15 and February 18/20. The weakness in the spot-rupee at 48.80 levels saw a few exporters holding back while importers came into cover month-end payables, a dealer with a forex brokerage said. The market seems to be still a tad wary of the upcoming redemption of the $5.5 billion RIBs even though the central bank has said that all will be fine.
FORECAST: Premiums seen weakening a tad on Wednesday.
The government securities (G-Sec) market saw prices reman in subdued at the short- and the longer-end. The 7.27% 2013 saw seen four piase lower at Rs 11.01. The benchmark 10-year bond, the 7.27% 2013 was dealt at 5.3069%, off a session low of 5.3049% hit in afternoon trading. It ended at 5.3074% on Monday. Said Merrill Lynch in a weekly report on G-Secs: Concerns over the liquidity impact of RIB redemptions, despite central bank indications to the contrary, and the half-yearly close of accounts will likely keep market interest subdued. On the NSEs wholesale debt segment, 456 trades worth Rs 3,392.87 crore were seen. Despite sales by state-run banks, investors built positions on hopes of a cut in interest rates in the central banks monetary policy review next month. Banks sold bonds ahead of an impending $5.5 billion RIB redemption amid fears it could cause a temporary cash crunch.
FORECAST: Bond deals to remain subdued on Wednesday.
(Compiled by Raghu Mohan)