Call Money

An easy trend prevailed in the interbank call market on Tuesday with the call rate dipping to an intraday low of 2.75 per cent, dealers said.

Opening at 4.0-4.5 per cent compared with the previous day's close of 4.5-5.0 per cent, the call rate immediately fell to 3.0-3.75 per cent on ample fund supplies. Most deals were transacted between 3.0 and 3.75 per cent, a dealer at a state-owned bank said. The call rate ended at 2.75-3.25 per cent. The call rate is expected to move in a similar band on Wednesday, dealers said. Despite the ouflow of Rs 4,500 crore via three day repo deals with the RBI, banks were flush with funds, dealers said. This was partly because the RBI reversed earlier repo deals with banks totalling Rs 4,000 crore thereby restricting the net repo outflow to Rs 500 crore. The call rate is seen moving between 2 and 4.5 per cent on Wednesday, dealers said.

FORECAST: Call rate seen between 2 and 4.5 per cent on Wednesday.

Spot Dollar

The rupee gained against the dollar as exporters began offloading the US currency on Tuesday, dealers said.

Opening at 35.7900-35.8000 to a dollar, the rupee touched a low of 35.81 on some dollar buying, they said. But the rupee soon began to firm as exporters began to sell dollars to take profits.

The rupee on Monday ended at 35.7950-35.8000 to a dollar after opening firmer at 35.7650-35.7750. Tuesday's stronger rupee was also because of large dollar inflows through foreign institutional investors. ``The inflows pushed up the rupee,'' a dealer at a large state-owned bank said. The rupee touched the day's high of 35.7650 per dollar. The rupee ended at 35.7650-35.7700 per dollar. There was no intervention by the Reserve Bank of India today. Dealers said the RBI may intervene on Wednesday if the rupee gains further. The dollar is expected to move in a similar range on Wednesday.

FORECAST: Rupee seen in a similar range on Wednesday.

Forward Premia

Premiums on the dollar opened lower from the previous day's close in dull trading, dealers on Tuesday said.

Six-month dollar premium opened lower at 3.65 per cent over the spot rate compared with the previous day's close of 3.75 per cent.

The trend, however, remained more or less steady on Tuesday, they said. The steady trend prevailed mainly due to lack of interest. ``There was small merchant demand in early trading but supplies were also ample to take care of the demand,'' a dealer at a private-owned bank said.

Some selling was seen dollars for December, January and February deliveries. But the selling did not have any lasting impact on the premiums which only close about one paise lower from the opening level, dealers said. Six month dollar closed at 3.60 per cent compared with the opening level of 3.65 per cent.

FORECAST: Premiums may dip marginally on Wednesday. Six month dollar seen around 3.5-3.6 per cent.Gilts

Activity in the government bond market on Tuesday centred around the 12.59-per cent, 2004 stock, dealers said.

Trades in the 12.59-per cent bonds amounted to Rs 290 crore contributing a major chunk of the roughly Rs 771 crore worth of bonds traded on the National Stock Exchange.

Prices in most of the bonds appreciated because of the low interbank call rates. A few banks were said to have funded their security purchases though call borrowings. The 12.59-per cent bonds touched a high of Rs 101.29 but fell to Rs 101.15 on some selling pressure, dealers said. The prices, however, firmed later after a large financial institutions entered the market and bought the bonds, a dealer at a brokerage said. The bonds settled around Rs 101.25-101.26, he added. Most deals were restricted to bonds with short to medium-term maturities.

FORECAST:Trading interest likley to continue as overnight rates are seen softer on Wednesday.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.