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"The Rs 4000-crore tax outflow which was expected to come into the system last
Call Rate
The overnight call money rates crossed the 10 per cent barrier and touched an intra-day high of 10.75 per cent on Wednesday owing to huge demand for funds. The call rates opened at 9.75-9.90 per cent, 15-30 basis points higher than its previous close of 9.60 per cent. According to money market dealers, call rates have firmed up due to tight money market conditions.
"The Rs 4000-crore tax outflow which was expected to come into the system last week has still not come into the system," said a dealer. According to money market dealers, the fact that most banks are short on their CRR requirement has also created huge demand for funds. The rates were finally closed at 10.50-10.75 per cent. "A few deals were also struck betwen 10.75-11 per cent levels," dealers said. Call rates are expected to ease next week as Rs 3,000 crore is expected to come into the system on January 18 through redemption of zero coupon 1999 paper.
FORECAST: Call rates are seen at 10-10.75 per cent on Thursday.
Spot rupee
The rupee appreciated to an intra-day high of 42.47/49 against the dollar on Wednesday owing to marginally high interbank selling on behalf of corporates. The Indian currency opened at 42.50/51 against the dollar, unchanged from its previous close. Due to huge selling by banks, the rupee appreciated by 2 piase to 42.48/49 against the dollar to finally close at 42.47/48 against the dollar.
The RBI reference rate for US dollar was Rs 42.50 on Wednesday against the previous peg of Rs 42.50. Meanwhile, the Indian currency weakened against the euro. The rupee opened at 49.04 against euro compared with its previous open of 48.81, went to a high of 49.74, came down to a low of 49.04 to finally settle at 49.56 against euro towards the close.
FORECAST: The rupee is seen between 42.46-42.55 on Thursday.
Forward premiums
The forward premiums across the board firmed up by 2-8 paise on Wednesday owing to huge paying by banks and corporates in the forward. "Due to the high call rates and lack of funds in the system most corporates were seen paying in forwards. Even RBI was paying on Wednesday," dealers said.
The six-month annualised cover closed at 6.5 per cent (6 per cent), three months at 6.1 per cent (5.25 per cent) and one month at 6 per cent (4.75 per cent). January premium closed at 9.50-10.50 paise (7-8 paise), February at 28-30 paise (23-25 paise), March at 48-51 paise (44-46 paise), April at 77-79 paise (71-73 paise), May at 98-102 paise (92-96 paise), June at 123-125 paise (117-120 paise), July at 151-153 paise (143-146 paise), August at 176-180 paise (171-174 paise), September at 206-208 paise (199-202 paise), October at 233-236 paise (225-230 paise), November at 262-265 paise (254-257 paise), and December at 292-297 paise (284-287 paise).
FORECAST: The six-month annualised premium is seen at 6-6.8 per cent on Thursday.
Gilts
Due to lack of liquidity in the system on Wednesday when call rates touched a high of 10.75 per cent, most gilts traders were seen selling securities in the market to remain liquid. The selling interest in the market saw gilts prices softening by 2-3 paise throughout the day. "Lot of selling interest was seen in the market on Wednesday. However it was met by equivalent demand in the system," said money market dealers.
The 11.40 per cent 2000 paper was traded at Rs 100.13 (Rs 100.15), 11.55 per cent 2001 paper quoted at Rs 100.13, 12.50 per cent 2004 paper at Rs 100.24. The wholesale debt market of NSE witnessed trades worth Rs 353.10 crore. The 11.40 per cent government government loan maturing in 2000 was traded worth Rs 80 crore at a weighted yield of 11.30 per cent. The 11.78 per cent government loan maturing in 2003 was traded worth Rs 40 crore at a weighted yield of 11.74 per cent.
FORECAST: Gilts prices are expected to soften by 1-3 paise on Thursday.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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