The interbank call rate on Thursday opened at 4.0-4.5 per cent, unchanged from the previous day's close, dealers said.

The call rate touched an intra-day low of three per cent as demand from borrowers was low, they said. Most deals were concluded between 3.5-4.0 per cent. The call rate ended lower from the opening level at 3.0-3.5 per cent.

``There was not much activity in the security market either,'' said a dealer at a private-owned bank. Usually traders take advantage of the interest differential between the bond and the call market whenever the call rate dips below five per cent.

However, this time banks have taken a cautious stand as they are uncertain whether the liquidity will continue to keep the call rates low following the steep depreciation in the rupee against the dollar. At the four-day repo auction, the RBI received only four bids totalling Rs 701 crore.

FORECAST: Call rate seen easy on Friday, may move in a 2-3 per cent band.

Spot Dollar

The rupee continued to weaken on Thursday after opening at 38.50-38.53 to a dollar as importers continued to buy dollars fearing that the rupee will depreciate further, dealers said.

On Wednesday, the rupee had closed at 38.54-38.60 to a dollar. The rupee on Thursday touched the day's low of 38.65 per dollar despite the Reserve Bank of India hiking the interest rate on overdue export bill finance rate of 91 days and above by two percentage points at 15 per cent, dealers said.

``There was some initial selling by exporters following the hike in the interest rates, but importers' panic made exporters hold back their dollars,'' a dealer at a private-owned bank said.

The RBI intervened toward the close of trading and sold roughly $100 million to ease the rising dollar, dealers said. The selling pushed down the dollar to Rs 38.35, but demand for dollars once again firmed up the dollar to Rs 38.53-38.60.

FORECAST: Rupee may weaken further, RBI intervention likely on Friday.

Forward Premia

The Reserve Bank of India (RBI) sold forward delivery contracts in early trading in an attempt to plug any rise in premiums, dealers said on Thursday.

Six-month dollar deliveries opened at the previous closing level of 6.15 per cent over the spot rate, but weakened following the interventions, dealers said.

`The RBI could have intervened about 3-4 times during the day to hammer down the premiums,'' a dealer at a brokerage said.The six-month dollar contracts ended at 5.9 per cent after touching an intra-day low of 5.8 per cent.

The RBI sold January, April and May delivery contracts. According to dealers' estimation, the RBI could have sold roughly $200 million worth of forward contracts on Thursday.

``The RBI's interventions stemmed the speculative tendency in the forward market today,'' a dealer at a private-owned bank said.

FORECAST: Premiums seen in a similar range on Friday.

Gilts

Volumes on the National Stock Exchange at Rs 432.02 crore were slightly above the previous levels of Rs 408.50 crore. Dealers attributed the marginal rise in volumes to the low interbank call rates.

Besides, an additional inflow of earlier repurchase agreements with the Reserve Bank of India (RBI) also aided some buying interest. The RBI will reverse Rs 4,200- crore worth of repo deals on Friday. The net inflow into the banking system on Friday is Rs 3,499 crore after considering the recent repo auction held on Thursday. The inflow on Friday is expected to boost trading interest in the government bonds and yields are likely to fall as a result, dealers said.

The RBI on Thursday accepted all the four bids worth Rs 701 crore received at the 4-day repo auction. The payment date for successful bidders will be on Friday.

FORECAST: Yields may fall further on Friday on renewed buying interest.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.