Call MoneyThe overnight call money on Wednesday crashed and reached an all-time low of 11 per cent, the lowest rate in the last two weeks. It closed at 11 to 12 per cent.
The overnight call money opened at a high of 50 to 60 per cent on Wednesday, dropped a little in the morning session and then fell to 20 to 30 per cent in the afternoon. The call rates closed in the region of 11 to 12 per cent.
Most deals were struck in the region of 20 to 30 per cent. "Some stray deals were also struck in the region of 50 to 60 per cent," said a dealer from STCI. According to dealers in the market, the interest rates in the call market crashed drastically on Wednesday because of the approaching reporting Friday. "There was not demand from the borrowers as most of them became lenders. The borrower banks which turned into lender were nationalised public sector banks," said a dealers.
Forecast: The overnight call money rates are likely to open in the region of 10 to 12 per cent on Thursday.
SpotDollar
Spot rupee weakened by 40 paise on Wednesday after the State Bank of India entered the market to buy dollars for its corporate clients. The spot rupee opened weaker at 38.55 against Tuesday's close of 38.39 and fell further after some banks started buying dollars and exporters stayed away from selling any of their holdings. The rupee weakened to touch 38.75/80 on Wednesday on renewed pressure. "SBI was buying in small lots on Wednesday to meet some of the demand from corporates," a chief dealer in a private sector bank said. According to dealers, the pressure on the rupee has not yet reduced. "There is a lot of underlying pressure on the rupee," a dealer said. The Reserve Bank bought spot dollars on Tuesday in small lots after the rupee had appreciated beyond 38.50 to touch 38.39.
Forecast: According to dealers, the rupee will rule between 38.40/80 on Thursday.
Forward Premiums
Forwards dropped on Friday as overnight call rates started on their southward journey. The six-monthforward closed at 14 per cent -- down from 16 per cent on Tuesday. Inter-bank call rates fell to 11 per cent on Tuesday after opening at 55 per cent on account of the reporting Friday. According to sources, the Reserve Bank will intervene in the forward market to cool the forwards.
"This will cool the call rates also," a market source said. Three-month forward closed at 18.5 per cent, while one-year forwards closed at 12.70 per cent. The Reserve Bank did not intervene in the forwards market on Wednesday but bought dollars from banks which were long on dollars.
Forecast: The forwards are expected to cool further on Thursday and realign with the domestic call rates.
Gilts
Prices of securities firmed up slightly on Wednesday, but fell again towards the latter part of the day on Wednesday. The yields on treasury bills, which were ruling at 25 per cent levels, dropped to more reasonable levels after the securities started looking up, a dealer at a private sector bank said.
The wholesaledebt market segment of the National Stock Exchange witnessed trades worth Rs 484.99 crore on Wednesday. The most actively traded security during the day included the 13.50 per cent 1998 government stock which was traded for Rs 19 crore at a weighted average yield of 17.47 per cent, the price of which firmed up sending its yield falling.The 364-day treasury bills maturing on April 10, 1998, were traded for Rs 140 crore at a weighted yield of 15.26 per cent. Repo deals worth Rs 145 crore were traded during the day.
Forecast: Securities prices could further firm up.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
