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FE NEWS SERVICE
Call Money
The call market remained flat on Thursday as most banks had covered their positions ahead of the reporting Friday. Call rates opened at 8-8.10 per cent, ruled around 7.90-8.10 per cent and closed at 8.00-8.05 per cent. Most transactions were made at 8-8.05 per cent.
Money supply was fairly comfortable, which was further supplemented by inflows through maturity of a government bond, dealers said. Liquidity in the system also improved as the 12.30 per cent 1998 security matured on Thursday.
Demand for funds was also lower because most banks had covered their reserve requirements for the fortnightly cycle, they added. Banks report their reserves position to the Reserve Bank of India every alternate Friday.
FORECAST: Call rates are seen below the benchmark 8 per cent on Friday.
Spot Dollar
The spot rupee firmed up on Thursday owing to dollar-selling by exporters and import cancellations. The Indian currency opened at 42.56/57, weaker than its previous close of 42.54.But later the rupee gained. Dealers said many a bank, including the State Bank of India, sold dollars.
"Clubbing up of export and import cancellations must have led to dollar-selling," a dealer from a private bank said. Most dealings were conducted at 42.55/56. But a sudden spurt of dollar-selling saw the rupee gain ground to 42.53/55. The rupee closed at 42.54. Dealers said the rupee will show a tendency for weakness once the year-end pressure for the dollar builds up. Meanwhile, the Reserve Bank of India pegged the reference rate for the dollar at 42.55 on Thursday compared with its previous fix of 42.57.
FORECAST: The rupee is seen in the 42.54-42.57 band on Friday.
Forward Premiums
Forward premiums softened on Thursday with pressure easing off the spot rupee. The six-month annualised forward cover closed at 7.45 per cent at the close of trades compared with its previous close of 7.5 per cent. The one-year cover quoted at 8.35 (8.43 per cent).
"The forward rupee tracked the spotrupee for most part of the day and the State Bank of India was seen selling in the forward segments also. This led to selling pressure which saw near-term forward premiums ease by 1-2 paise and far-end ones by 3-4 paise," a dealer from a private bank said.
Dealers said there was not much paying pressure and with the strenghtening of the rupee, the paying pressure was not sustainable.
FORECAST: The six-month annualised cover is seen at 7.35-7.42 per cent on Friday.
Gilts
The secondary market for government securities remained listless despite a fairly easy call money market. But there were some enquiries for short-dated papers which rose by 2-3 paise. The treasury bills segment also evoked stray enquiries.
The wholesale debt market of the National Stock Exchange witnessed increased activity worth Rs 553.54 crore. The 11.40 per cent government security maturing in 2000 traded worth Rs 95 crore at a weighted yield of 11.34 per cent. The 11.75 per cent government security maturing in 2001traded worth Rs 55 crore at a weighted yield of 11.49 per cent.
The zero coupon government bond maturing in 2000 (series III) traded worth Rs 35 crore at a weighted yield of 11.32 per cent. The 12.50 per state government security maturing in 2008 traded at a weighted yield of 12.44 per cent.
FORECAST: Gilts are seen in Thursday's range on Friday.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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