Call MoneyThe overnight call money market witnessed a marginally high interest rate on Monday. The call rates opened at 9.25-9.50 per cent, eased a little in the afternoon and finally closed at 9.25-9.50 per cent. "The market was squarish on Monday. Meanwhile, the overall demand was good as compared to last week," a dealer from a nationalised bank said.
Market dealers expect the call rates to firm up to 11-12 per cent owing to a huge outflow of funds on account of advance tax and VDIS payments which have been pegged at around Rs 6,000 crore. The STCI average rate was 9.28 per cent on a turnover of Rs 1,500 crore. The Mumbai Interbank Overnight Average Rate weighted average contributed by 17 institutions and banks was 9.33 per cent.
The Reserve Bank of India mopped up Rs 165 crore through a three-day fixed-rate repo in government of India dated securities.
FORECAST: The call money rates are likely to rise to 11-12 per cent by the end of the week.
Spot Dollar
The spot rupeeremained rangebound on Monday and closed at 39.55 -- marginally weaker than the previous close of 39.50. Opening at 39.49/50, unchanged from the previous close, the rupee gained slightly to 39.47 on some selling pressure. But late buying pressure from the State Bank of India (SBI) saw the rupee weaken considerably to the 39.53 level.
"After the SBI started buying dollars, most banks which were short on dollars began buying dollars which saw tthe rupee weaken to 39.53," a dealer in a private sector bank said. Subsequently, the rupee closed at 39.53/55.
Dealers said that the forex market is awaiting policy measures from the new government which will also give a direction to the rupee. "Till the new budget is presented, the rupee is likely to remain rangebound," a dealer in a foreign bank said.
FORECAST: The rupee is expected to remain rangebound and rule between 39.50 and 39.60 on Tuesday.
Forward Premiums
The forward market reacted favourably to the formation of a BJP-led government atthe Centre. Forward premiums fell by 10 to 15 paise across the board on signs of a stable government.
"It is initial euphoria that a stable government is in sight, which was one of the reasons the rupee weakness is slowly vanishing," a dealer in a private bank said. Dealers said that exporters were seen receiving and importers are staying back from booking dollars. Six-month forwards closed stronger at 10.45 per cent -- up from Thursday's close of 10.90 per cent.
One-month forwards closed at 11 per cent, which moved in tandem with the call rates in the money market. One-year forwards closed at 10.35 per cent.
FORECAST: Dealers said that the forward premia is likely to fall further on receiving pressure.
Gilts
The government securities market remained dull on Monday. "Not much interest was seen in the government securities market as there was not much buyer- or seller-interest," a dealer from a public sector bank said.
"Hardly two to three deals were struck in the governmentsecurities market," market dealers said. However, a little action was witnessed in the treasury bills segment.
The wholesale debt market of the NSE witnessed trades worth Rs 114.66 crore. The 11 per cent government loan maturing in 2002 was traded for Rs 20 crore at a yield of 12.01 per cent.
The 364-day treasury bill maturing on April 10 was traded at a weighted yield of 10.70 per cent. A repo trade worth Rs 20 crore was transacted at 10.85 per cent for a repo term of 14 days.
FORECAST: The prices in the government securities market are likely towitness a downward trend this week.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
