Call Money

The interbank call rate opened at 5.0-5.5 per cent and slipped marginally to touch an intraday low of 4.5 per cent on Monday, dealers said.

Despite the ample liquidity in the system, call rate remained range bound, they said. This was because there was an equal demand for overnight funds, they added.

The call rate ended at 4.50-4.75 per cent.Banks were largely borrowing in call to fund their government bond purchases, a dealer at a brokerage said. This prevented a steep fall in call rates, he said.On Saturday, the first day of the two-week period called reporting fortnight, call rates moved in a narrow range of 4.5-5.5 per cent. The call rate may firm up on Tuesday because the RBI mopped up Rs 5,150 crore via four-day repo auction late Monday.

The repo rate was unchanged at the previous auction's level of 4.05 per cent.Tuesday's outflow will tighten the call rate to around 6-8 per cent, dealers said.

FORECAST: Call rate seen firmer on Tuesday, may move in a 6-8 per cent band.

Spot Dollar

The rupee remained in a narrow range of 35.8075-35.8225 to a dollar on Monday, dealers said. Opening at its previous day's closing range of 35.8175-35.8225 per dollar, the rupee strengthened marginally on some dollar-selling, they said.

The rupee topped 35.8075 to a dollar during the day before closing weaker at 35.8100-35.8150.

The intraday firmness in the rupee was mainly because a few banks that went long on the US currency on expectations of a weaker rupee, squared their positions today, a dealer at a private-owned bank said.

These banks took positions in the dollar because they had expected the Reserve Bank of India to support the dollar from weakening against the rupee.However, since the RBI did not intervene today these banks squared their positions, dealers said.

FORECAST: Rupee seen between 35.81-35.83 per dollar on Tuesday.

Forward Premia

The Reserve Bank of India intervened in the forward dollar market in a bid to boost the sagging premiums, dealers Monday said. The intervention, though not too large, stopped the premiums from falling and pushed premiums across-the-board by 0.5 to 1.5 paise at close, dealers said.

Six-month dollar deliveries ended at 4.05 per cent over the spot rate from the day's low of 4 per cent. The six-month dollar had opened higher at 4.1 per cent. On Friday, the last traded day, six-month dollar moved narrowly between 4.13 and 4.15 per cent. The premiums fell because State Bank of India bought far-forward dollars in early trades on Monday, a dealer at a state-owned bank said. The bank bought January to March deliveries which pushed premiums across-the-board by around 2.0-2.5 paise. However, RBI's intervention late afternoon pushed up the premiums by 1.0-1.5 paise, he added.

FORECAST: Six-month dollars seen steady around 4 per cent levels on Tuesday.

Gilts

Government bond prices rose on Monday as the low interbank overnight rates prompted bankers to take fresh positions, dealers said. Prices rose thereby pushing down the yields on renewed buying interest, they said. A few banks borrowed money in call at 4.5-5.5 per cent to buy high-yielding stocks. The bond yields ranged between 10 and 12 per cent.

The latest seven-year bonds, auctioned at a coupon rate of 12.59 per cent on June 17, touched a high of Rs 101.42 today compared with last week's 100.80 levels, dealers said. Bond volumes at the NSE were up at Rs 450 crore.

Dealers are expecting the volumes to dip on Tuesday, because interbank rates may firm to 6-8 per cent following the Rs 5,150 crore outflow toward RBI's repo deals.

The Reserve Bank of India late Monday auctioned four-day repo deals at 4.05 per cent. Successful bidders will have to make payment on Tuesday.

FORECAST: Volumes may dip on Tuesday because call rates are expected to tighten.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.