Call MoneyThe overnight call money rate remained rangebound on Friday. The call rate opened in the region of 9-9.25 per cent on Friday, same as Thursday's close.It eased a little in the afternoon to close in the region of 9-9.10 per cent.
Most deals were struck in the region of 9.10-9.25 per cent. The trend will continue for another week or so, dealers said.
The main reason cited by dealers for the existing easy call rate is the surplus liquidity in the market. "Most of the surplus fund which the banks have is going into RBI fixed repo which is fixed at nine per cent," said a dealer from a nationalised bank.The STCI average on Friday was 9.06 per cent on a turnover of Rs 1,600 crore. The Reuter Mumbai Interbank Average Rate, the weighted average for 17 banks and institutions, was 9.17 per cent.
FORECAST: The overnight call rate is likely to open at the same level on Saturday.
Spot Dollar
The spot rupee weakened to cross the crucial 38.90 barrier on Friday on sustained buyingfrom the State Bank of India (SBI). Opening at 38.89/90 -- marginally weaker than Thursday's close -- the Indian unit lost ground as the SBI went on a buying spree. The rupee dipped in early morning trades to cross the 38.90 mark and fell further to trade at 38.94/95.
"Deals were conducted at 38.95 also," a dealer in a private sector bank confirmed. Although some selling did see the rupee gain to 38.89, it slipped on sustained demand from importers to close at 38.93/94.
"Today's demand for dollars was purely driven by commercial needs and most trades were merchant related," a chief dealer in a private bank said.
FORECAST: The rupee is likely to test the 39 mark on sustained month-end demand for dollars from corporates.
Forward Premiums
Forwards weakened as importers rushed to cover on seeing the sustained pressure on the rupee. The forwards, which fell last week, rose unabated throughout the week as the spot rupee came under renewed pressure from corporates which have to meetmonth-end commitments.
The SBI, which was buying dollars in the spot market paid in the forward markets, saw the forward move up. "There was hardly any speculative activity, but there was some some paying pressure because of the RBI cap of 10 per cent," a dealer in a foreign bank said.
The RBI stayed from intervening in the forward market which gave an indication that the apex bank would intervene only when speculative activity took over the market. Importers are still shaky while exporters are still holding back their remmitances.
FORECAST: Forwards are likely to go up further if the spot rupee continues to be under pressure.
Gilts
Friday saw the prices in the government securities market move downwards by 5-10 paise. "Some kind of selling pressure was there across all maturities in the market on Friday, although the market was squarish," a dealer from a private sector bank said.
"Most foreign banks were showing a little interest in selling securities. Main sellers in the marketwere SBI and some foreign banks," dealers said.
The wholesale debt market of the NSE witnessed trades worth Rs 254.77 crore. The 13.50 per cent government loan maturing in 1998 was traded for Rs 37 crore at a weighted yield of 12.70 per cent. The 11.75 per cent government loan maturing in 2001 was traded for Rs 30 crore at a weighted yield of 11.98 per cent. The 365-days treasury bill maturing on April 10 was traded for Rs 20 crore at a weighted yield of 12.06 per cent.
FORECAST: The securities market is not likely to see much action on Saturday.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
