CALL MONEY
Call rates closed at 7.90-8 per cent on Thursday. Opening the day at 7.90-8 per cent from its previous close at 7.85-8 per cent, call rates moved in an extremely fine band on the back of poor demand for funds. "The market was squarish today... banks have covered their positions ahead of the Reporting Friday. Refinance borrowings from the RBI appeared to have squared off", a dealer with a European bank said. Call rates did not dip much below 8 per cent despite Reporting Friday around the corner because of the anticipated advance tax outflows. Around Rs 6,500 crore is expected to leave banks next week as they remit corporate advance tax collections to the government.
"Both the upcoming advance tax outflows and residual refinance repayment to the RBI may have prevented call rates from going much below 8 per cent", a dealer with a US-based bank said. At close, call rates were seen at 8 per cent levels.
FORECAST: Call rates seen at 7.90-8.90 per cent levels on Friday.SPOT DOLLAR
The rupee gained a shade on Friday to close at 43.40/50. Opening the day at 43.52/53 from its overnight close at 43.515/52, the rupee gained toward close of trades after the initial importer-demand for dollars was met. "The dollar-interest seen over the last few days waned... quite a few banks who had built up long-dollar positions unwound them... yesterday's intervention by the SBI had made everybody go long dollars. The SBI was not there today, and the rupee firmed towards close", a dealer said. There was stray demand for dollars from corporates, but it quickly absorbed in morning trade. "A state-run fertiliser firm and an oil firm bought dollars, but the volumes were marginal", a dealer said. Cash/tom closed at 0.25/0.2750 paise (0.25/0.3750 paise), cash/spot at 1/1.25 paise (0.50/0.75 paise) with tom/spot at 0.75/1 paise (0.25/0.375 paise). RBI fixed its reference rate for the dollar at 43.52 against its previous 43.52.
FORECAST: Rupee seen at 43.52 levels on Friday.
FORWARD PREMIUMS
Forward premiums tracked a firmed spot-rupee at 43.49/50 levels on Thursday and finished a shade softer. The six-month annualised forward premium was quoted at 4.35 per cent annualised, off the day's high of 4.41 percent and down from its overnight level of 4.38 per cent. "There was some receiving in the far forwards", a dealer with a European bank said, adding:
"A couple of state-run banks and a foreign bank were seen selling dollars... importer demand was lower than expected". January dollars finished at 20/21 paise (21/22 paise), February at 35/36 paise (36/37 paise) while in the far-terms, June dollars quoted at 99/100 paise (101/102 paise) with July at 115/116 paise (118/119 paise). Foreign institutional investors made net purchases of $220.5 million in debt and equity in December to date, but dealers said it had not led to any dollar inflows since it was funded by money brought in earlier.
FORECAST: Forward premiums will quote a shade higher on Friday.
GILTS
Bond prices held "flattish" on Friday, and quoted little changed from its overnight levels. Most of the deals were in a tight band of 2-3 paise. The 11.99 per cent 2009 was bid at Rs 103.45 after being dealt in the morning at Rs 103.47-103.49 levels. This bond was traded on Wednesday evening at Rs 103.49. "Most trades in the morning have been in the 2009 and 2011 maturities," a bond dealer with a primary dealership said. The 12.32 per cent 2011 was dealt at Rs 104.95-104.96 in early deals from its overnight quote at Rs 104.95/98. "There is no buying interest in the market... sellers also do not want to download at these levels... funding costs are comfortable with call rates steady under eight percent," a dealer said, adding: "most traders were apprehensive about building fresh positions ahead of year-end liquidity concerns and next week's advance tax outflows".
FORECAST: Bond prices seen holding steady on Friday.
(Compiled by Raghu Mohan)
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.