CALL

The interbank call rates dipped marginally on Wednesday to 8.0-9.5 per cent levels from the previous day's traded levels of 8.5-10.25 per cent, dealers said.

A few stray deals were also concluded at higher levels of around 10 per cent, they said. ``Banks borrowed at these levels in early trades when many players hadn't entered the market,'' said a dealer at a foreign-owned bank.

Most deals were transacted between 8.5 and 9.25 per cent range, dealers said. The downtrend in the call rates is because the Reserve Bank of India has been injecting rupees into the market by buying dollars. The intervention has helped to improve liquidity in the market and at the same time support the dollar from weakening against the rupee, dealers said.

Today's borrowing was for a two-day period because of a holiday on Thursday. The call rate is expected to be lower from the today's level on Friday.

Dealers expect the call rate to move in a band of 6.5-8.0 per cent. However, on Saturday, the call rate could firm marginally because of the outflow in the new five-year bond that will be auctioned on Friday.

FOREX

The Reserve Bank of India continued supporting the US currency for the third successive day on Wednesday leading to a firmer dollar, dealers said.

The rupee opened higher at 35.8450-35.8550 to a dollar from the previous day's closing levels of around 35.8350, dealers said. The RBI intervention was supported by State Bank of India which also bought the US currency thereby pushing the rupee to an intraday low of 35.8850 per dollar. It is not known whether State Bank bought on behalf of its clients or at the behest of RBI, dealers said. But forex dealers panicked in a market that was dominated by the two major players for most of the day.

Importers were not very active and no major buying was reported by them. Some selling interest by exporters was seen toward close and State Bank also joined the bandwagon, dealers said. This led to the rupee gaining slightly and the dollar softened marginally. The rupee ended at 35.8650-35.8725 per dollar. The rupee is seen weakening on Friday if the RBI continues its dollar buying, dealers said. On Thursday banks in Mumbai are closed for a festive holiday.

FORWARD PREMIA

Premiums on the dollar fell marginally after overnight (domestic) call rates showed signs of easing on Wednesday, dealers said. Forward premiums opened two-three paise lower from the opening levels, dealers said. The fall was, however, restricted in August and September where premiums dipped just one paise.

``The premiums dipped because overnight domestic interest rates eased,'' said a dealer at a private-owned bank. Banks have till lately been swapping spot dollars for cash because overnight (domestic) rates were as high as 10 per cent.

The easing of overnight rates have now stopped the cash-to-spot swap. However, activity in the far forward dollars is now seen picking up, dealers said. ``There is still paying (of premiums) pressure on far forward dollars,'' a dealer said. ``Deals have been reported beyond November too,'' he added.

April, 1998 -delivery dollars were traded at Rs 1.6 over the spot dollar rate, the dealer said. Six month dollar premiums ended 4.9 per cent over the spot rate compared with the previous day's closing of 5.05 per cent. There was no intervention by the RBI in the forward market, dealers said.

GILTS

Government bond yields dipped further as overnight interest rates showed some signs of easing after continuously staying firm at 9-10 per cent for a week.

Prices in the secondary government bond market continued its uptrend seen since Tuesday. ``The correction continues and the bond prices are seen rising further on Friday when the market reopens after a holiday,'' a treasury head at a large state-owned bank said.

At the near end, the rise in prices was marginal and ranged between three and five paise, dealers said. In the 13.50-per cent bonds maturing in 1997, for example, the bonds were traded at four paise above the previous day's level of Rs 101.60. In the medium-term, the five-year, 13.80-per cent bonds, 2002 were traded between Rs 105.42 and Rs 105.55 on Wednesday compared with the previous day's Rs 105.20. The long-term bonds like the 13.05-per cent, 2007 traded 36 paise above the previous day's level of Rs 100.20.

At the 364-day treasury bills auction, the RBI accepted one bid worth Rs 35 crore at a cut-off rate of Rs 91.76. The yield to maturity at the cut-off works out to be 9.0 per cent.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.