CALL MONEY
Call rates ended around 8 per cent levels on Wednesday. Opening at 8-8.10 per cent, overnight rates ruled in a narrow range and ended at 7.95-8.05%, unchanged from their Tuesday's levels. Dealers said that liquidity remained adequate, which allowed players to meet demand for funds. "Banks and primary dealers also drew funds from the refinance facility of the RBI, which provided some cushion to the market," a primary dealer said. Dealers expect liquidity to remain comfortable, though call rates may firm on Friday, when pay-out for the Rs 3,000 crore bond auction takes place. The RBI has announced an auction for re-issue of 12 per cent 2008 bond on Thursday. Dealers said that strong expectations of a cut in bank rate and CRR discouraged the rates from rising. "Hopes of a bank rate and CRR cut in the coming days were quite strong in Wednesday's session," a dealer with a state-run bank said.
FORECAST: Call rates seen steady on Thursday.SPOT DOLLAR
The rupee ended three paise firmer, fresh dollar supplies hitting the market on Wednesday. The rupee opened at 43.585/59 as compared to Tuesday's close of 43.58/585. "There was some buying of dollars by banks in early trades. Later, dollar supplies from export remittances and foreign investor flows came in, which aided the rupee's rise," a dealer with a state-run bank said. The rupee ended at 43.55/555. "Corporate dollar-demand remained slack," a dealer with a forex brokerage said. Dealers said they did not see much customary sales on Wednesday because of low weekend swap differentials. Banks normally sell dollars on Wednesdays and square up by the weekend to take advantage of weekend premiums. Cash/spot and tom/spot ended at 0.5-0.75 paise each, with cash/tom at 0.25-0.375 paise. The RBI maintained its reference rate against the dollar at 43.57. The rupee ended at 71.32 per pound sterling and 44.03 to a euro.
FORECAST: Rupee seen at 43.54-56 range on Thursday.
FORWARD PREMIUMS
Forward premiums eased on Wednesday on expectations of easy liquidity in money markets. The six-month forward premium ended at an annualised 3%, off the day's low of 2.98% and compared with Tuesday's 3.06 %. In the near forwards, January dollars ended at 3/3.5 paise, February at 13/14 paise, while in the far forwards, June ended at 57/58 paise and July at 68/69 paise. "The forward premiums came down on high expectations of a cut in bank rate and CRR in the coming days," a dealer said. Dealers said there were good receivings by banks. Premiums in the near-end came down by one paise and declined by 3/4 paise in the far forwards. Talk of interest rate easing intensified on Tuesday after ICICI Ltd announced a 100 basis points reduction in long term rates and 50 basis points in short-term lending rates. The forward premiums have shown a downtrend after the government cut interest rate on PPF.
FORECAST: Forward premiums seen lower, though spot market movement may affect sentiments on Thursday.
GILTS
Expectations of a cut in key interest rates led bond prices to end moderately higher on Wednesday. The bond prices ruled lower in early trades compared to Tuesday's close, on selling by players wanting to stay liquid ahead of Thursday's auction.
The RBI has announced an auction for re-issue of 12 per cent 2008 security on Thursday. "Demand for bonds picked up on hopes of cut in bank rate and CRR this week," a state-run bank dealer said. The 11.83 per cent 2014 bond ended at Rs 104.42 as compared to Rs 104.31 on Tuesday. The 12.40 2013 bond ended at Rs 108.39 as compared to Rs 108.25 in the previous session. "The liquidity continues to remain sufficient in the system, which may fuel the buying sentiment on Thursday," a primary dealer said.
FORECAST: Bond prices seen higher on Thursday.
-- Compiled by Anurag Joshi
Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.