RBI intervention checks Re slide

MONEY MARKET ROUND-UP

Dollar sales from the Reserve Bank of India rescued the rupee from weakening below the 46-mark on Thursday  even amid strong dollar demand from oil companies and other importers, dealers said.

The Indian unit ended the day at Rs 45.75 per dollar, against Rs 45.44 on Monday. The sharp fall in local shares also spurred dollar demand from foreign funds that weighed on the rupee.

“Local shares ended down so there were some outflows from foreign institutional investors. There was also demand from oil companies in the market on Thursday ,” said a dealer with a private bank.

The Bombay Stock Exchange’s Sensex ended 3 per cent lower at 13570.31, while National Stock Exchange’s Nifty ended 2.3 per cent down at 4126.90.

The biggest intra-day surge ever in crude oil prices Monday also prompted banks to buy the greenback, dealers said. NYMEX crude oil prices rose over $16 per barrel in overnight trade, but ended at $109.37 per barrel. However, the rupee’s fall was limited around 45.90 per $1 as RBI stepped in to sell dollars.
 

HITS AND MISSES Currency per dollar
	Sep 22,2008	Sep 23,2008	% change
Korean Won	1141.30	1149.35	-0.71
Indian Rupee	45.45	45.74	-0.64
Singapore Dollar	1.408	1.413	-0.31
Indonesian Rupiah	9305.00	9325.00	-0.21
Japanese Yen	105.510	105.540	-0.03
Hong Kong Dollar	7.769	7.761	0.10
Malaysian Ringgit	3.416	3.410	0.18
Taiwan Dollar	32.01	31.93	0.26
Thai Baht	33.89	33.76	0.38

G-sec: High yields

In a blow to the bond market on Thursday , the government advanced its second-half borrowing for the current financial year 2008-09 (April-March) by announcing a Rs 10,000-crore auction scheduled for Friday. The government will auction 7.94 per cent, 2021 bond for Rs 6,000 crore and 8.28 per cent, 2032 bond for Rs 4,000 crore on Friday.

“Yields at the long-end of the curve will get hammered, though the reaction at the 10-year bond will be with yields rising 10-15 basis points,” said Piyush Wadhwa, senior vice-president, ICICI Securities Primary Dealership.

The most-traded 10-year bond 8.24 per cent, 2018 yield on Thursday  ended at 8.38 per cent, up nearly 30 basis points on week.

Call money: Subdued demand

Call money rate ended down on Thursday  despite fears liquidity may tighten because demand was subdued as most banks have met their reserve needs in the first week of the current Reporting Fortnight itself, dealers said.

One-day call rate ended at 12.00-12.30 per cent on Thursday  compared with Monday’s closing of 14.00-14.50 per cent. CBLOs ended at a weighted average rate of 9.16 per cent on Thursday  compared with Monday’s close of 9.12 per cent.

“Demand was not much on Thursday . It seems most banks have covered much of the reserves for the current Reporting Fortnight,” said a dealer at a state-run bank. According to some dealers, banks had also borrowed heavily since last week anticipating liquidity to tighten more in coming days due to the two-day strike by state-run banks.