Call Money
Call rates ended steady at 7.90-8 per cent on Monday with inflows of Rs 1,000 crore not making a much of an impact. Overnight rates opened at 7.90-8.05 per cent. Inflows from coupon payments on the 11.55 per cent 2001, 11.75 per cent 2003, 12.25 per cent 2010 and 12.30 per cent 2016 did not allow any significant movement in call rates. "The market had already factored in the inflows. Liquidity was ample though demand for funds remained nominal," a primary dealer said. Call rates had closed at a low 5-6 per cent in the last session on Reporting Friday. Dealers do not rule out a bond auction by the Reserve Bank of India (RBI) to sterilise the excess liquidity hanging in the system due to measures of the apex bank to deal withany Y2K-related contingencies in December.FORECAST: Call rates seen steady on Tuesday.
Spot Dollar
The rupee ended unchanged from its previous levels after showing signs of firmness on Monday. The rupee opened at 43.49/4950 as compared to Friday's close of 43.4950/50. "The rupee touched an intra-day high of 43.48 due to dollar selling by a few large banks and importers," a dealer with a state-run bank said, adding: "Import demand was missing". In the afternoon, however, the State Bank of India (SBI) bought dollars, which liquidated the marginal gains. The rupee ended at 43.4950/50. "In the post-mid session, trading remained a tight range, with alternate bouts of buying and selling dollars by banks," a dealer with a forex brokerage said. Cash/spot was not quoted as New York market was closed for the weekend. The RBI's reference rate for the dollar was 43.48 as compared to 43.49 on Friday. The rupee closed at 70.32 per pound sterling and 43.98 to a euro.
FORECAST: The rupee seen at 43.4750-4950 levels on Tuesday
Forward Premiums
Forward premiums ended sharply lower on Monday due to good receivings and ample liquidity in the money market. Dealers said the surge in government bond prices in the early part of the day was also a factor for the easing of premiums. The six-month annualised premium ended at 3.70 per cent compared with 4.03 per cent on the weekend. "First, there was the impression that the bond market has been hit by a huge wave of liquidity. And that was compounded by export receivings premiums," a dealer with a private bank said. Dealers said foreign and private banks received premiums (buy-sell swaps) in the six-month maturity. January dollars ended at 7.5/8.5paise, February at 20/21 paise, while in the far forwards June closed at 77/78 paise and July at 91/92 paise. "Steady call rates aided the softness in premiums," a dealer said. Call rates ended Monday at 7.90-8 per cent.
FORECAST: Forward premiums seen lower with six-month premium at 3.50 per cent on Tuesday.
Gilts
Bond prices rallied on Monday as a liquidity overhang remained in the system. The RBI had announced a special liquidity facility and other measures for December to boost liquidity ahead of the millennium transition. Bond prices at the long-end rose by 15-20 paise while at the short-end it firmed by 4-5 paise. The 12.29 per cent 2010 ended at Rs 106.37/40 after touching an intra-day high of Rs 106.57. The bond had ended on Friday at Rs 106.16. The 12.40 per cent 2013 closed at Rs 106.75/77, before touching a high of Rs 106.90. It had ended on Friday at Rs 106.52. At the short-end, the 11.15 per cent 2002 ended at Rs 101.93 as compared to its previous close of Rs 101.88. "Steady call rates aided the rally in bond prices," a dealer said. The market opened on a firm note, but declined in later trading on profit-booking by players. "There was an uptrend towards the close," a state-run bank dealer said.
FORECAST: Bond prices seen higher on Tuesday.
(Compiled by Anurag Joshi)
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.