Call Money
Call rates ended steady at 8.10-8.20 per cent on Friday. Overnight rates opened at 8.20-8.40%, as compared to Thursday's close of 8.05-8.10 %. "There was some pressure on the rates in the morning on account of outflows of Rs 3,000 crore towards subscription to the 12 % 2008 bond," a primary dealer said. The central bank received 367 bids totalling Rs 9,082.50 crore, of which 56 bids for the notified amount of Rs 3,000 crore were accepted. "The overwhelming response to the auction shows the liquidity levels in the system," a state-run bank dealer said, adding: "There was some covering by a few players in the morning. Players drew from the refinance facility of the RBI," a dealer said. Demand for funds remained nominal in the afternoon, which allowed the call rates to rule lower. The RBI received no bids in the 6 per cent repo auction on Thursday.FORECAST: Call rates seen at 7.90-8 per cent levels on Saturday.
Spot Dollar
The rupee ended steady at 43.57/575 onFriday. The rupee opened at 43.57/58, as compared to the previous close of 43.57/575. Dealers said though there were good export remittances during the day, dollar demand from a state-run bank prevented the rupee from firming. This allowed the rupee to trade in a thin range. Dealers said a continuation of the port strike might weaken the rupee in the short run as dollar supplies get affected. "The Port strike could have an impact if it continues for long, with many exporters already saying their bills are held up," a dealer at a state-run bank said. Cash/spot ended at 1.25-1.5 paise, cash/tom at 1-1.25 paise and tom/spot at 0.25-0.375. The RBI fixed its reference rate against the dollar at 43.58 as compared to 43.56 on Thursday. The rupee ended at 72.03 per pound sterling and 44.20 to a euro.
FORECAST: Rupee seen steady against the dollar on Monday.
Forward premiums
Forward premiums rose slightly on some paying interest from banks. Forward premiums rose slightly with the six-month forwardpremium ending at an annualised 3.13 per cent compared with Thursday's close of 3.00 % January dollars ended at 2/2.5 paise, February at 13/14 paise, while in the far forwards, June ended at 59/60 paise and July at 68/69 paise. "The forward premiums closely tracked the call rates, which too ended marginally higher on some liquidity crunch due to outflows of Rs 3,000 crore towards the re-issued 12 per cent 2008 bond. Dealers did not rule the forward premiums falling below the 2 per cent mark next week, in case expectations of the RBI slashing key interest rates come true. The money market was rife with talk of likely rate cuts by the central bank after the government cut rates on its small savings schemes by 100 basis points last Friday.
FORECAST: Forward premiums seen tracking spot rupee, may fall in case of good receivings on Monday.
Gilts
Bond prices ended higher in a volatile session on Friday. Government bonds started the day on a bearish note as marketmen booked profits at higherlevels.
However, the bond prices rebounded on fresh buying support, fuelled by market confidence over liquidity levels in the system. "There was a feeling that prices may drop after Thursday's auction. However, adequate liquidity led to good buying," a primary dealer said. The central bank received Rs 9,082 crore at the auction to re-issue of 12 per cent 2008 for a notified amount of Rs 3,000 crore. The new security rose to end at Rs 106.91 as compared to the last close of Rs 106.84. The 11.83 per cent ended at Rs 104.71 as compared to the previous close of Rs 104.67.
FORECAST: Bond prices seen higher on Saturday.
(Compiled by Anurag Joshi)
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