Re regains loss as banks sell $

MONEY MARKET ROUND-UP

The rupee ended steady after recouping intra-day losses against the US dollar as banks continuously sold the greenback for exporters and foreign institutional investors (FIIs), according to dealers.

The Indian unit ended at 39.9600 to a dollar compared with 39.9500 on Friday. It had weakened to 39.9900 today.

On Monday, the foreign exchange market was closed on account of Ambedkar Jayanti.

"There was good amount of bunched-up flows from exporters in their NOSTRO accounts. These were pending flows since the last week," said a dealer of a state-run bank.

Some exporters were also said to be selling dollars on fears that rising inflation may sooner or later lift the rupee more, dealers said.

"Chidambaram (Finance Minister) has been continuously stressing on steps to be taken to curb inflation. So, there are views among exporters that allowing the rupee to rise could be one of the measures taken by RBI," said a dealer of another state-run bank.

On Monday, Finance Minister P Chidambaram had said the Reserve Bank of India (RBI) would take appropriate steps to contain inflation, which has surged to an over three-year-high of 7.41 per cent for the week to March 29.

The central bank is widely expected to hike banks' cash reserve ratio (CRR) or raise short-term benchmark rates, or both, in its annual monetary policy on April 29.

Call: Stays steady
Call money rate ended steady today as banks' reserve requirements were comfortably met because of ample liquidity, according to dealers.

The one-day call rate ended at 6-6.10 per cent compared with Saturday's close of 6-6.05 per cent for 3-day loans.

CBLOs (collateralised borrowing and lending obligation) ended at a weighted average rate of 5.92 per cent compared with 6.02 per cent.

"There is no dearth of funds right now. So all demands for the new Reporting Fortnight were met comfortably," said a dealer at a state-run bank.

The demand was strong, being the first week of the Reporting Fortnight.

This kept CBLO rates firm and reduced subscription at the Reserve Bank of India's reverse repo tender.

Today, banks parked just Rs 21,700 crore at RBI's reverse repo compared with Rs 37,300 crore last Friday.

G-sec: Thin trade
Government securities (G-sec) prices ended marginally up in thin trade today as most investors stuck to the sidelines awaiting cues on liquidity and inflation.

"The market is taking a cautious approach, since it is the beginning of the financial year, and not taking any punt," said Anoop Verma, assistant vice-president, debt and treasury, Development Credit Bank.