Call Money
Call ended ruled steady on Monday. Opening the day at 8.25-8.30%, call rates were in a narrow range throughout the day. "There were a fear in early trades that call rates would firm up. But the CRR hike by 0.25% - the first tranche of a two-part CRR hike by 0.50% - effective from Saturday, and a cut in bank's refinance facilities did not have much impact on call rates", a dealer said. The effect of the CRR hike will see a Rs 3,800 crore outflow from the inter-bank market. Stray quotes at 8.50% was reported, but dealers said that it was unlikely that any deals were struck at these levels. "The RBI's decision to privately place the 11% 2006 and 11.30% 2010 forRs 6,000 crore took the pressure off the market", a money market analyst said. In the term-money market, volumes stood at Rs 1,873 crore with rates ranging between 9% and 12.50%. Elsewhere, the RBI received a single bid for Rs 4,000 crore at its reverse-repos auction under the liquidity adjustment facility.
FORECAST: Call rates seen around 8.10% on Tuesday.Spot dollar
The rupee breached the 45 mark on Monday - the first time after the RBI announced steps to defend the rupee. Opening at 44.86/88, the rupee went to a low of 45.03/04 before closing higher at 45.01/03. "There was dollar demand for oil imports, but many believe that speculation over higher US rates played a role... the SBI was also bidding for dollars", a dealer said. There was also some residual month-end dollar deman and this reportedly exerted pressure on the rupee. "Adequate local dollar supplies accumulated over the weekend will cope with the buying interest", a dealer said adding: "there could some pressure on the rupee in the coming days". FIIs have been net-sellers to the extent of over $550 million in June and July and the Sensex has fallen by 15% in over two weeks. Cash/spot closed at 0.30/0.50 paise with cash/tom and tom/spot at 0.150.20 paise each. The RBI fixed its rate for the dollar at 44.99, against its previous 44.89.
FORECAST: Re seen at 45.05 levels on Tuesday.
Forward premiums
Premiums ended a shade higher on Monday, tracking a weaker spot rupee, which fellow bellow the 45 to the dollar mark. The six-month annualised forward premium closed at 4.16% (4.25%). "There was paying across most maturities, especially in the far forwards", a dealer with a forex brokerage said, adding: "Call rates were a shade high in early trades when it opened at 8.25-8.30% levels". August dollars ended at 15/16 paise (16/17 paise), September at 29/31 paise (31/32 paise), while in the far end, January closed at 93/95 paise (92/93 paise) with February at 108/110 paise (104/106 paise).The rupee has depreciated by 3.5% since the beginning of the year. This is relatively modest compared to what the dollar's strength has done to other currencies.
FORECAST: Premiums seen holding 4.15% levels on Tuesday.
Gilts
Short- to medium-term dated bond prices fell by 10-20 paise on Monday. The 12.50% 2004 opened at Rs 105.30 (Rs 105.27) to close at Rs 104.97. The 11% 2006 opened at Rs 100.02 levels, but was seen around Rs 99.80 by close of trades. "The weakness in the spot rupee to below 45 levels saw quite a many off-load bonds in anticipation of stiffer Reserve Bank measures to prop up the rupee", a dealer with a primary dealership said. Call rates had opened ay 8.25-8.30% levels, but the CRR hike by 0.25% - the first tranche of a two-part CRR hike by 0.50% - effective from Saturday, and a reduction in bank's refinance facilities did not have much impact of an impact on call rates or on the bond prices. "There is liquidity in the market, but sentiment is poor", a dealer with a US-based bank said, adding: "It is the weakness in the rupee that affected trades in the securities market today.
FORECAST: Bond prices seen holding current levels on Monday.
(Compiled by Raghu Mohan)
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