Outflows from Monday's auction of the Rs 3,000 crore eight-year GoI bond saw call rates firm up today in the inter bank call market. rates opened closer to 8 per cent levels, up from Mondays' close at 5 per cent. Dealers said that call rates climbed to a high of 8.5 per cent, hovered in that range to close lower at 7.5 per cent. A dealer in a European bank said that most deals were struck at 8.0-8.25 percent range.

Meanwhile, the RBI announced a three day repos auction of GoI stock on Thursday and the auction of 14-day T-Bills on the same day. Payment by successful bidders for the T-Bill auction will be on Saturday.

FORECAST: Call rates seen lower in 5.9-6 per cent band on Wednesday.

Spot Dollar

The rupee opened at 35.71, almost unchanged from the previous close at 35.70.

In the interbank market the dollar was mostly traded in the range between 35.71 and 35.72. The dollar was traded at a high of 35.72 and a low of 35.70 to finally close at 35.71. Dealers said that there was no major covering by importers.

The move by Reserve Bank to allow FIIs to cover in the forwards on their debt investments was expected to weaken the rupee, but there was no such development.

The Reserve Bank of India intervened in the market with $40 million, but this did not have much impact on the exchange front. The Reserve Bank pegged the reference rate at 35.72.

FORECAST: Rupee seen in a narrow band of 35.71.35.72 per dollar on Wednesday.

Forward Premia

The RBI decision to allow foreign institutional investors (FIIs) to cover investments in debt in the forward market caused excitement in the inter-bank forex market.

Dealers, however, made it clear that few will cover given the firm trend in the rupee. The news though caused premiums to jump up a bit.

Premiums rose by about ten paise across the board. Six-month annualised forward premium closed the day at 4.54 per cent, up from the previous close of 4.14 per cent.

Dealers said that December, January, and July delivery dollars were most active. January opened at 71/74 paisa and closed at 75/77 paisa whereas July opened Rs 1.61/1.63 and closed at Rs 1.61/68.

FORECAST: Expect erratic movement in forward premiums on Wednesday.

Gilts

Debt market saw active trading yesterday as record number of deals were struck in the wholesale debt market segment of the National Stock Exchange. Deals worth Rs 1,831 crore were struck in the segment with the newly issued 11.19 per cent eight-year paper witnessing deals to the tune of Rs 900 crore. This paper which was was auctioned yesterday was traded at 11.10-11 per cent levels. The other actively traded security was the 12.59 per cent gilt maturing in 2004 which saw deals to the tune of Rs 500 crore. The price of this security also rose by 8-9 paise during the day to touch Rs 107.15.

"The yield on 12. 59 per cent gilt maturing in 2004 will come down further to 11 per cent tomorrow", a dealer with a brokerage said.

FORECAST: Prices are expected to rise further especially in the 12.59 per cent gilt maturing in 2004.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.