Call money
Call rates on Wednesday ended lower on poor demand from borrowers. The overnight interest rates opened at 12-12.5 per cent. "The call rates declined as demand for funds faded, with banks and primary dealers already having covered their positions ahead of reporting day on Thursday," a primary dealer said. The money markets are closed on Friday. The call rates hovered around 11.75-12.25% in afternoon trades as demand for funds evaporated. The call rates ended at 7.5-8.5%. The response to the reverse repo auction of the RBI was nominal, with the central bank receiving 12 bids for Rs 380 crore. The apex bank fixed a cut-off rate of 12.25%. It accepted a single bid for 12.25%. "The lenders were quoting at 12-12.25 at the time the LAF results were announced. After the results, they realised there were no takers. So this brought down the rates," a dealer with a primary dealership firm said.
FORECAST: Call rates seen lower on Thursday.Spot dollar
The rupee ruled in a thin range in dull trading on Wednesday. The rupee opened at 44.66/68, weaker from the previous close of 44.635/645. "Trading was range-bound with nominal demand from corporates and importers," a dealer with a forex brokerage said. The rupee was traded at 44.67/68 in the mid morning session. "Dollar supply was good, particularly inward remittances from the Gulf," a state-run bank dealer said. The rupee ended at 44.6625/6675, off intra-day lows of 44.6575/6625. Cash/spot ended at 0.375/0.5 paise, cash/tom at 0.5/0.75 paise and tom/spot closing at 2.5/3 paise. The RBI fixed its reference rate for the US dollar at 44.67. "Month end dollar demand was easily absorbed by supply of dollars," dealers said. The dollar sales from mainly from state-run banks including the State Bank of India and a few foreign banks.
FORECAST: The rupee seen steady on Thursday.
Forward premiums
Premiums declined sharply tracking lower call rates on Wednesday. "There was good receiving interest by banks after the call rates fell sharply in the afternoon session," a dealer said. The six-month premium ended at an annualised 3.26 per cent as compared to 3.59 per cent on Tuesday. The one-year premium ended at 3.29 per cent, lower from the previous close of 3.44 per cent. July dollars ended at 13/14 paise, August at 26/27 paise, while in the far end January closed at 83/85 paise and February at 94/96 paise. "The call rates influenced the premiums, with activity more pronounced in the one, three and six month maturities," a state-run bank dealer said. "Players who had booked positions in late May, when the rupee came under pressure unwound them in the hope of a stable currency," a foreign bank dealer said.
FORECAST: Premiums seen range-bound on Thursday.
Gilts
Bond prices on Wednesday rose in evening deals amid lower call money rates. The call money rates ended lower at 7.5-8.5 per cent. The 11.90 per cent 2007 security ended at Rs 105.75, off intra-day lows of Rs 105.63. The bond was quoted at Rs 105.62 in Tuesday evening deals. "Trades were dull in mid morning trades, but rose on easy liquidity through low overnight rates," a primary dealer said. The 11.99 per cent 2009 bond ended at Rs 105.69 as compared to Rs 105.63 on Tuesday. "There was good activity in the short and medium end, with trading in the far end being lacklustre," a state-run bank dealer said. Dealers said they expected a bond auction to be announced by the Centre by the end of this week. The Centre has targeted a gross borrowing programme of Rs 1,17,000 crore for the current fiscal.
FORECAST: Bond prices seen marginally higher on Thursday.
-- (Compiled by Anurag Joshi)
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