The interbank call rate on Thursday opened firmer, at 3-4 per cent, from the previous day's closing level of 0.75-1.25 per cent, dealers said. The rate, however, ended lower at 0.50-0.75 per cent. Deals at the opening range were, however, very few, dealers said. Most banks instead preferred to swap dollars to raise rupee funds, thy added.

The higher call rate was mainly because banks paid Rs 3,000 towards the six-year government bonds that were auctioned on Wednesday, dealers said. Besides, today being the reporting day for banks some last moment covering pushed up the rate at the opening, they said.

On a reporting day banks must meet reserve obligations with the central bank. The reporting day usually falls on a Friday, but since its a public holiday, the reporting day falls on the immediate preceding day. The call rate is expected to open higher on Saturday. FORECAST: Call rate seen in a 5-6 per cent band on Saturday.

Spot Dollar

The foreign exchange market remained largely quiet on Thursday with the rupee staying steady at the opening range of 35.7050-35.7150 to a dollar, dealers said.

The rupee, firmed in late trades to 35.6950-35.7050 per dollar, which was also the day's closing level, they said. The strengthening of the rupee was attributed to some dollar-selling by a few corporates, a dealer at a private-owned bank said.

There were also some talks that the Reserve Bank of India intervened in the market when the dollar fell below Rs 35.70. But most dealers said that they were not aware of any intervention today.``The selling (of dollars) was not large to warrant any intervention,'' said a dealer at a private-owned bank.

Friday, the foreign-exchange market will remain close for a festive holiday. The market will now resume after a long weekend on Monday.

FORECAST: Rupee seen steady at around 35.70-35.71 per dollar on Monday.Gilts

Prices in the secondary bond market rose on Thursday after the new bond auctioned Wednesday led the rally, dealers said.

The new six-year bond rose by Rs 1.30 at Rs 101.30 today. There were two major deals of Rs 300 crore and Rs 150 crore in the new 13.83-per cent coupon bonds, 2003. Total trades in this bond touched Rs 650 crore at the NSE taking the total trades to all-time high of Rs 1,543 crore.

Market players focussed on the 13.83-per cent bonds the rally is expected to continue on Saturday when the market opens after a festive holiday on Friday.

Fund managers who were unsuccessful at the auction on Wednesday said they liquidity in the market has pushed down the coupon at the auction.

``Conditions have not changed since the government came out with a 12.59-per cent, seven year bonds last month," a fund manager said. ``I never expected the six-coupon to fall below 12 per cent," he said.

FORECAST: Prices seen rising further on Saturday.

Forward Premia

Activity in the forward dollar market was largely focussed on the cash segment as banks raised rupee funds by swapping dollars, dealers said.

Premiums on cash to spot segment rose to 1.5-2.5 paise over the spot dollar rate. The cash/spot dollars till today did not command any premium because rupee funds were as low as 0.75 per cent till late Wednesday.

With the overnight domestic interest rates having risen to 3-4 per cent today, banks resorted to raising rupee funds in the cash dollar market which in turn pushed up the premiums. Premiums on forwards by and large were steady at the opening level. The premiums dipped marginally at close due to lack of interest, dealers said.

Six-month dollar premiums closed at 3.55 per cent over the spot rate compared with the opening level of 3.60 per cent.

On Wednesday, six month dollars closed at 3.58 per cent.

FORECAST: Premiums seen steady on Monday.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.