Call money
Call money rates ended steady amid easy liquidity in the system on Wednesday. The overnight interest rates opened at 7.25-7.50 per cent as the concerns of tighter liquidity after outflows towards payment of Rs 2,500 crore for the 12-year bond. The call rates rose to 7.50 per cent in morning trades, as some banks squared up their requirements, amid concerns on the liquidity front. The bond auction on Monday was over-subscribed with the Reserve Bank of India (RBI) receiving over Rs 6,000 crore. "Banks were covering their positions in the morning, fearing a liquidity crunch after announcement of a fresh bond auction. However, the call rates eased once the demand receded and supplies improved," a primary dealer said. Call rates ended at 7-7.10 per cent. The RBI did not receive any bids at its daily reverse repo auction. The Centre has announced a 4-year bond auction for Rs 4,000 crore.
FORECAST: Call money rates seen steady on Thursday.Spot dollar
The rupee ended weaker on Wednesday on heavy dollar demand from foreign funds.The rupee opened at 44.74/75, little changed from the previous close of 44.745/75. Dealers said it stopped short of touching the key 44.80 level after PSU banks stepped in with dollar supplies. The rupee touched an intra-day high of 44.795. It has fallen nearly 15 paise from 44.64 in end June, and such a rapid movement in the otherwise stable currency was causing some anxiety among firms. "The weakness could be temporary, since the demand was reported to be bunched requirements of a few corporates and foreign funds, and that had kept inter-bank spreads in the rupee narrow. The rupee ended at 44.77/78. Foreign funds have been sellers in equities this month.
They have till date sold $201 million worth stocks in July adding to their net sales of $230.7 million in June. Dealers said a few firms sold export proceeds at higher dollar levels on Wednesday.
FORECAST: The rupee seen around 44.75/77 on Thursday.
Forward premiums
Premiums ended higher amid paying pressure from banks on Wednesday. The six month premium ended higher at an annualised 3.88 per cent from 3.64 per cent on Tuesday. The one year premium ended at 3.85 per cent from 3.68 per cent. July dollars ended at 3/4 paise, August at 17/18 paise, while in the far end, January closed at 88/90 paise and February at 102/103 paise.
"There were concerns on the liquidity as the Centre announced a fresh bond auction of Rs 4,000 crore for July 21. Liquidity in the system, however, was good. Near forwards rose 1-2 paise, while far forwards by 3-4 paise. "There was paying notably in the one, three and six month maturities," a dealer said. In the money market, call rates ended steady at 7-7.10 per cent.Inflow during the current month are expected to Rs 14000 crore.
FORECAST: Premiums seen range-bound on Thursday.
Gilts
Bond prices ended slightly lower on liquidity concerns on Wednesday. "There were concerns about liquidity after the auction was announced," a primary dealer said. The Centre has announced auction of the 4-year paper for Rs 4,000 crore on July 21. Short and medium term bonds fell by 2-3 paise in the morning session, but eroded these gains in the afternoon session. The 11.90 per cent 2007 bond ended at Rs 107.72 from the previous close of Rs 107.76. "The sentiment has by and large been positive as call rates have ruled steady. The rupee was also stable," a private bank dealer said. "The RBI announcement for auctioning 4-year paper was factored by the market," a dealer said. The Centre has targeted a gross borrowing programme of Rs 1,17,000 crore for the current fiscal
FORECAST: Bond prices seen holding current levels on Thursday.
-- (Compiled by Anurag Joshi)
Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.