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FE NEWS SERVICE
Call Money
Call money rates ruled easy on Thursday and moved in a narrow band of 8-8.05 per cent throughout the day and hovered close to the repo rate owing to comfortable liquidity in the system and lacklustre demand for funds.
The overnight rates opened at 8 per cent in the morning and remained rangebound throughout the day. However, due to marginal demand for funds at noon the rate firmed up slightly to close at 8.05 per cent towards the close.
"There is comfortable liquidity in the system which is keeping away the banks from borrowing from call market," said money market dealers. The total outflow from the system on Friday was Rs 3,307 crore.
The central bank received four applications and accepted all of them. The NSE's overnight Mibid and Mibor were quoted at 8.02 per cent and 8.09 per cent respectively. Meanwhile, its 14-day Mibid and Mibor were quoted at 8.39 per cent and 8.95 per cent respectively.
FORECAST: The call rates are expected to hover around the repo level onFriday.
Spot Dollar
The spot rupee weakened by 4 paise during the day to an intra day low of 42.32/33 against the dollar owing to high dollar demand by banks and corporates.
The Indian currency opened at 42.28/29 against dollar, one paise lower than their previous closing levels of 42.27/28. Throughout the morning the rates ruled steady at the opening levels. However, at noon due to high dollar demand, the Indian currency weakened by 4 paise.
"The SBI entered the market at noon and bought dollars which weakened the rupee against dollar," said a forex dealer at a private sector bank. According to dealers, a few European banks and corporates bought dollars which weakened the rupee.
Dealers attribute the sudden spurt in demand for dollars to corporate covering. After the rupee reached an intra day low of 42.32/33 against the dollar, there was no supply in the system which kept the rupee stable. The Indian currency finally closed at these levels. The RBI fixed its reference rate for US dollarfive paise higher at Rs 42.33 against the previous fix of Rs 42.28.
FORECAST: The rupee is seen in a band of 42.26/37 on Friday.
Forward Premiums
The forward premiums were closely tracking the spot rupee on Thursday. The forward premiums across all maturities moved in a band of 1-5 paise on Thursday.
The near-end forward premium went up by 1 paise where as far-end premiums firmed up by 3-5 paise when the Indian currency weakened to an intra day low of 42.32/33 against the dollar. "Importers covering in the forwards resulted in forwards firming up towards the close," said forex dealers.
The six month annualised premium closed at 7.1 per cent, three-months at 5.9 per cent and one-month at 4.9 per cent. The November premiums were quoted at 6-9 paise (6-8 paise), December at 23-27 paise (23-25 paise), January at 49-53 paise (49-52 paise), February at 75-78 paise (75-77 paise), March at 106-111 paise (106-109 paise), April at 137-142 paise (137-140 paise), May at 167-173 paise (164-169paise), June at 193-199 paise (193-198 paise), July at 227-232 paise (225-229 paise), August at 257-263 paise (253-258 paise) and September at 287-293 paise (285-290 paise).
FORECAST: The six-month annualised premium is seen between 7-7.4 per cent on Friday.
Gilts
Sentiments in the gilts market improved on Thursday owing to market expectation that the RBI would issue a new revised price list. The short term gilts prices improved by 1-3 paise. "Currently there is a lot of selling interest in the market," dealers said.
The wholesale debt market of NSE witnessed trades worth Rs 413.7 crore. The zero coupon government bond maturing in February 1999 was traded worth Rs 81 crore at a weighted yield of 9.51 per cent. The 12 per cent government stock maturing in April 1999 was traded worth Rs 40 crore at a weighted yield of 10.17 per cent. The 11.40 per cent government loan maturing in 2000 was traded worth Rs 25 crore at a weighted yield of 11.34 per cent.
Commercial paper of Ramco Industriesworth Rs 7 crore was traded at a yield of 10.6 per cent.
FORECAST: Securities market expected to remain dull on Thursday.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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