Call rate

The interbank call rate on Monday opened at 4.5-5.0 per cent compared with the previous day's opening of 6-7 per cent, dealers said.The call rate ended steady at the opening range after peaking 5.5 per cent for a brief while, they said.The call rate is expected to move in a similar band on Tuesday despite an outflow of Rs 4,500 crore in three-day repo deals with the Reserve Bank of India.The RBI today auctioned three-day repo deals worth Rs 4,500 crore at 3.90 per cent. The payment toward the repo deals will be on Tuesday. The net outflow from the banking system, however, will be restricted to only Rs 500 crore because of an additional inflow through earlier repo reversals.The RBI on Tuesday will reverse Rs 4,000 crore worth of repo deals entered with banks on Saturday.FORECAST: Call rate seen in a similar band on Tuesday.

Spot dollar

The rupee on Monday weakened against the US currency after a few private-owned corporates and a large state-owned oil company entered the market and bought dollars, dealers said.

Opening at 35.7650-35.7750 to a dollar, the rupee soon fell to the day's traded low of 35.80 as banks began buying on behalf of their clients, they said.

State Bank of India also bought a few million dollars, a dealer at a private-owned bank said. But the buying was restricted and did not cause the spurt in the dollar, he added. There was no intervention by the Reserve Bank of India today, dealers said. The rupee was last traded on Friday and moved in a wide range of 35.75-35.78 to a dollar.

The rupee is expected to weaken further on Tuesday because banks may continue buy dollars, dealers said.

FORECAST: Rupee expected to move between 35.76 and 35.82 to a dollar

Forward premia

Premiums on the dollar for future deliveries on Monday moved in a narrow range of 0.50-1.0 paise, dealers said.

``The premiums were more or less stagnant throughout the day on lack of interest,'' said a dealer at a brokerage.

The premiums dipped marginally by 0.5-1.0 paise from the opening levels, dealers said.

Six-month dollar ended at 3.75 per cent over the spot rate. On Friday, the premiums closed around 3.50 per cent.

The premiums opened higher today because banks expected the demand to pick up today after a strike by state-owned banks paralysed the forward market on Friday.

However, the market did not show any signs of firming today with importers still preferring to meet their requirements in the spot dollar market rather than covering their risk by taking forward cover.

FORECAST: Premiums seen steady at the current levels on Tuesday.

Gilts

The low interbank call rates prompted renewed interest in the government bond market on Monday, dealers said. Prices in government bonds rose today, pushing down the yields across-the-board, dealers said. Trades at the NSE totalled Rs 609 crore, they said. Among the actively traded bonds were the 12.59-per cent bonds, 2004 which rose to Rs 101.19 from Saturday's high of Rs 100.97, the prices in other bonds like the 13.50-per cent, 1998; the 12-per cent 1999; the 11.75-per cent, 2001 also rose, dealers said. Trading was largely seen in bonds maturing upto seven years, dealers said. A few deals were also concluded in long-term bonds with ten years to mature, they added.

At the three-day repo auction of government bonds held on Monday, the RBI lowered the cut-off repo rate to 3.90 per cent from the previous week's 3.95 per cent. The RBI accepted Rs 4,500 crore worth of bids, it said in a release.

FORECAST: Prices seen firming further on Tuesday.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.