Call MoneyThe overnight call money market remained rangebound on Tuesday. The call rate opened moderately higher at 9-9.10 per cent on Tuesday as compared to the previous close of 8.75-9 per cent, eased a little in the afternoon and closed at 8.75-9 per cent.
"The interbank call money market ruled squarish as the trend remained comparatively dull throughout the day here," a dealer from a nationalised bank said. The liquidity scenario was comfortable, dealers said. According to market dealers, the banks invested Rs 1,600 crore in repos. The trend remained squarish and the rates ruled between 8.25 and 9.25 per cent level.
Most deals were struck in the region of 8.25-9.25 per cent. The STCI's total turnover was Rs 900 crore on a weighted average of 9 per cent. Meanwhile, the Discount and Finance House of India (DFHI) extended market support to the tune of Rs 1,600 crore.
FORECAST: The call money market is expected to remain at the same level on Wednesday.
Spot dollar
The rupeetouched a low of 39.60 on Tuesday and finally closed at 39.44/48. Opening at 39.48/55, the Indian unit slipped immediately to touch 39.58/60 on State Bank of India buying "There were stray deals at 39.60," a dealer in a private bank said.
The weakening of the rupee in the initial part of the day was due to State Bank of India's buying dollars on behalf of the corporates. But as soon as the rupee touched 39.60, the SBI came and sold dollars. Dealers said that after the largest commercial bank started selling, other banks also took the cue and sold their dollar positions which saw the rupee gaining considerably to touch 39.44/48. The rupee eventually closed at 39.44/48, marginally stronger than Monday's closing level of 39.51. Dealers said that corporates were less nervous today after a clearer picture at the centre began to emerge.
FORECAST: The rupee is likely to appreciate in the short term.
Forward Premiums
The forward rupee gained on Tuesday in line with the gain posted by the spot rupeevis-a-vis the US dollar. Six-month forward rupee gained by 10 paise, while one-month forward rupee gained by 9 paise to close at 30 paise.
Dealers said that the SBI was receiving in the forward market, but for a very small amount and did not have any impact on the market.
The Reserve Bank of India did not intervene in the market. According to dealers, the forward rupee gained on account of the strengthening of the spot rupee. In the spot market, the rupee gained after the SBI started selling dollars. "Initially the forwards weakened but later on the gain in the spot market reflected on the forward rupee which gained," a dealer in a private bank said.
FORECAST: Dealers said that the forward rupee is likely to appreciate if the spot rupee continues to gain.
Gilts
The government securities market witnessed little activity on Tuesday. According to dealers, the prices in the securities market fell by five to ten paise.
"Traders are not taking position as the central bank has not yet given anyindication on the interest rate movement and overall uncertainty is prevailing in the securities market," dealers said.
The wholesale debt market of the NSE witnessed trade worth Rs 203. 63 crore on Tuesday.
The 13.25 per cent government loan maturing in 2000 was traded for Rs 50 crore at a yield of 12 per cent.
The corporate debenture of Whirlpool maturing in 1998 was traded for Rs 15 crore at a yield of 24.02 per cent.
The 364-days treasury bill maturing on April 24, 1998, was traded for Rs 40 crore at a weighted yield of 12.05 per cent.
FORECAST: The government securities market is likely to hover at the same level on Wednesday.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
