Call rates continued to rule tight above the repo rate on Tuesday owing to Rs 5,000-crore outflow through advance tax payment. Call rates opened at 9-9.10 per cent compared with their previous close of 9.10 per cent. Overnight rates ruled between 9 per cent and 9.10 per cent throughout the day and finally closed at 9.10 per cent. According to dealers, call rates are expected to remain tight during the fortnight as some major outflows are expected next week. "Tight liquidity is expected to see short-term interest rates move up next week. It is very likely that the Reserve Bank of India might lose its control over the M3," a primary dealer said. The outflow from the system on Tuesday through four-day fixed-rate repos was Rs 115 crore. In a fortnight, the total outstanding in the RBI repos has come down from Rs 1,800 crore to Rs 50 crore owing to tight money market conditions.FORECAST: Call rates are seen at 9-9.10 per cent on Wednesday.
Spot dollar
The spot rupee moved in a narrow 4 paise rangeon Tuesday owing to dull trading. The Indian currency opened at 42.54/55 against the dollar compared with its previous opening level of 42.55/56.
However marginal dollar supply and hectic selling by exporters saw the rupee strengthen by 4 paise to 42.49/50 in the morning. Towards the afternoon, surplus dollar supply was met by demand from importers which weakened the rupee by 3-4 paise. The rupee finally closed at 42.53/54, 1 paise lower than its opening level. According to forex dealers, the spot rupee is expected to move in a 42.50-42.58 range owing to subdued demand for funds in the market.The Reserve Bank of India reference rate for the dollar was Rs 42.53 (Rs 42.55).
FORECAST: The spot rupee is seen at 42.50-42.60 on Wednesday.
Forward premiums
Forward premiums fell by 2-3 paise on Tuesday owing to marginal receiving by exporters. "At the existing levels, importers are not interested in paying," dealers said. The six-month annualised premium quoted at 7.5 per cent, three months at 6.5 percent and one month at 5.6 per cent. The December premium closed at 2-3 paise, January 19-20 paise, February 40-42 paise, March 68-70 paise, April 98-100 paise, May 128-130 paise, June 199-210 paise, July 228-230 paise, August 222-225 paise, September 256-260 paise, October 290-294 paise and November 323-326 paise. Forward premiums are expected to rule easy throughout the week owing to a stable spot rupee.
FORECAST: The six-month annualised premium is seen at 7.3-7.8 per cent on Wednesday.
Gilts
The government securities market remained subdued on Tuesday owing to tight money market conditions. Short-term gilt prices softened by 2-3 paise owing to high call rates at above 9 per cent. "Tight liquidity conditions on account of advance tax outflows is keeping banks from taking new positions," a dealer said.
The 11.40 per cent paper maturing 2000 traded at Rs 100.08-100.09 and the 11.55 per cent paper maturing in 2001 at Rs 100.10. According to dealers, the state loan next week is also keepingbanks away from the gilts market. The wholesale debt market of NSE witnessed trades worth Rs 253.89 crore. The 11.75 per cent government loan maturing in 2001 was traded worth Rs 50 crore at a weighted yield of 11.51 per cent. Debentures of Gujarat Alkalies and Chemicals maturing in 2002 were traded worth Rs 5.5 crore at a yield of 17.57 per cent.
FORECAST: Gilts prices are expected to remain stable on Wednesday.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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