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FE NEWS SERVICE
Call Money
Call rates ruled at the repo level on Thursday to close slightly lower due to poor demand for funds by banks which had already taken positions much ahead of the reporting Friday.
The overnight rates opened at 8 per cent on Thursday, compared with their previous close of 7.50-8 per cent and eased to 7.75 per cent towards the close following lacklustre demand. "The banks are flush with funds as there is comfortable liquidity in the system," said money market dealers, with another Rs 1,000 crore expected to flow in by the end of the week through the redemption of government securities.
The outflow from the system via four-day repos was Rs 3,827 crore. On November 6, an inflow of about Rs 822.93 crore is expected through 364-day T-bills' redemption. "Call is expected to remain stable throughout the week and demand for funds will be low as most market players are cash surplus," said dealers.
FORECAST: Call rates are likely to remain easy on reporting Friday.
SpotDollar
The spot rupee remained highly volatile on Thursday. The Indian currency opened at 42.31/32 against the dollar, unchanged from its previous close.
However, SBI entered the market during the day and made purchases which weakened the rupee by 2 paise to 42.33-34 against the dollar. A few European banks were also reported to have bought dollars which further pulled the rupee down to 42.36-37 against the dollar. Hectic buying saw the rupee weaken by 4-5 paise.
In anticipation of SBI making further purchases, a few banks were reported to have bought on behalf of corporates. However, when SBI did not enter the market, hectic selling was witnessed at noon which strengthened the rupee by 5 paise to 42.31/32.
The rupee finally closed at these levels. According to forex dealers, the rupee is expected to remain stable during the week. The RBI reference rate for the US dollar was Rs 42.35 as against the previous peg of Rs 42.29.
FORECAST: The rupee is seen in the band of 42.28-42.40 onFriday.
Forwards Premiums
The forward premiums closely tracked the spot rupee on Thursday. The forward premiums opened at their previous closing levels and moved up slightly when the rupee weakened before easing towards the close by 1-3 paise across all maturities when the rupee appreciated by 4-5 paise later in the day.
The six-month annualised closed at 7.5 per cent, three months at 6.10 per cent and one month at 4.6 per cent. The November premium quoted at 9-10 paise, December at 29-32 paise, January at 55-58 paise, February at 82-86 paise, March at 112-115 paise, April at 142-145 paise, May at 172-175 paise, June at 202-205 paise, July at 233-237 paise, August at 264-269 paise, September at 295-300 paise and October at 331-336 paise.
FORECAST: The six-month annualised premium is seen between 7.4 and 7.8 per cent on Friday.
Gilts
The short-term gilts prices improved by 5-10 paise as market sentiment improved marginally due to the centre's private placement of Rs 5,000 crorewith the RBI earlier this week.
"As there is not much likelihood of a gilt paper in the near future, and the fact that call rates are ruling at repo levels, banks are parking surplus funds in short-term gilts," said a money market dealer.
The actively traded securities on Thursday included the zero coupon 2000 paper which was quoting at Rs 82.98 and 11.40 per cent 2000 paper at Rs 100.04. The wholesale debt market of the NSE witnessed trades worth Rs 382.39 crore.
The 11.40 per cent government loan maturing in 2000 saw trades worth Rs 60 crore at a weighted yield of 11.39 per cent. Commercial paper of Tisco maturing on January 14, 1999, saw trades worth Rs 10 crore at a yield of 10.78 per cent.
FORECAST: Short-term gilts prices are expected to remain stable on Friday.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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