Call money
Call rates held rocksteady on Friday at 7.15% levels in dull trades. Opening the day at 7-7.15 %, call rates held these levels for most of the day. ``There was not much demand for funds despite the fact that potentially Rs 5,000 crore will go off from the system if the twin-bond auction of the 11.10 % 2003 and 11.68% 2006 sails through today,'' a dealer with a Gulf-based bank said. Payment for the auction is on Tuesday. Inflows from repo redemptions of Rs 3,000 crore on Saturday and coupon flows worth Rs 942 crore today have enhanced supplies. ``There is ample supplies.. funds are available at 7-7.10 levels,'' a primary dealer said, adding: ``The cushion of central bank refinance will cap a spike in call rates.'' Data from the RBI showed refinance outstanding at the bank rate at Rs 9,379 crore on May 12, compared to the Rs 8,579 crore on May 11.
``There might be a small perk in call rates to 7.50 % levels on Tuesday,'' a dealer with a securities brokerage said.
FORECAST: Call rates may perk to 7.40 per cent levels on Tuesday.Spot dollar
The rupee held firm against the dollar on Friday. Opening the day 43.93/95 from its last close at 43.90/91, the rupee went briefly to an intra-day low of 43.96 in dull trades. ``The SBI was seen selling dollars. There were a few quotes above 44 levels, but the rupee never went that low... the State Bank of India's dollar sales took care of that,'' a dealer with a Gulf-based bank said. Demand for dollars on Friday continued in early trades today. On Friday, the rupee slid from highs of 43.85 driven mostly by inter-bank demand as corporates stayed on the sidelines. ``Trades were mostly inter-bank... all eyes are now on the federal open market commission meet on Tuesday,'' a dealer with a forex brokerage said. At close, the rupee was seen at 43.97/98. Cash/spot quoted at 0.25/0.38 paise (0.25/0.75 paise) with cash/tom and tom/spot at 0.13/01.9 paise (0.25/0.50 paise). The RBI fixed its reference rate for the dollar at 44.03 as compared to 43.92 on Thursday.
FORECAST: Rupee seen at 43.85 levels on Tuesday.
Forward premiums
Premiums held steady on Monday. The six-month forward premium ended at 2.50% (2.44%). ``There is little interest for forward dollars... most large corporates have covered their positions given that premiums are at their lows in a long, long time... again all eyes are now on the federal open market commission meeting tommorrow,'' a dealer with a forex brokerage said.
Potential outflows of Rs 5,000 crore on Tuesday following the auction of the 11.10 per cent 2003 and the 11.68% 2006 is seen pushing premiums up. May dollars ended at 3/4 paise, June at 12/13 paise, while in the far end, January closed at 82/84 paise and February at 92/95 paise. ``Premiums are expected to hold steady despite news of a fall in reserves,'' a dealer with a European bank said. Foreign exchange reserves fell to $37.732 billion on May 5, 2000 from $37.975 billion in the previous week, the RBI said in its weekly statistical supplement on Saturday.
FORECAST: Premiums may go a shade higher on Tuesday.
Gilts
Short- and medium-term bonds were weak in Monday morning trade as sentiment was hit after the rupee weakened a shade against the dollar. The 11.75 per cent 2001 was traded at Rs 102.90 compared to Saturday's levels of Rs 102.96. The 9.90 per cent 2005 was traded at Rs 100.30 against Saturday's Rs 100.39. The 11.68 per cent 2006 was traded at Rs 107.70. The bond was quoted at Rs 107.65/70 in the morning. Dealers said the market had discounted the likelihood of Monday's twin-bond auction being fully subscribed and its impact on liquidity. The Reserve Bank will conduct a twin-bond auction of 11.10 per cent 2003 and 11.68 per cent 2006 forRs 5,000 crore on Monday. Payout to the same extent on Tuesday will see bond prices dip a bit, dealers said.
FORECAST: Bond prices seen range-bound on Tuesday; auction results hold key to price movement.
-- (Compiled by Raghu Mohan)
Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.