Rupee slips on dollar demand

MONEY MARKET ROUND-UP

 "Crude oil prices have softened. So, it is an advantage for oil companies to buy dollars at this time," said a dealer with a state-run bank. The crude oil prices on New York Mercantile Exchange eased to $122 per barrel on Wednesday compared with $124.31 on Tuesday.  A few importers bought about $100 million through a south-based state-run bank at all levels today. Another state-run oil company bought around $70 million from a Mumbai-based state-run bank.  Call: Ends slightly down
Call rates slipped below 6 per cent in late trade and ended slightly down as lenders slashed rates amid low demand, dealers said. The one-day call rate ended at 5.75-6.00 per cent compared with Wednesday's close of 6.10-6.15 per cent.  Some deals were also struck in the 5.00-5.25 per cent band in the last hour of trade.  CBLOs ended at weighted average rate of 5.31 per cent versus 5.75 per cent on Wednesday.  The overnight rate had stayed close to 6 per cent till noon trade as lenders refrained from cutting rates amid low demand as they had the option to park excess cash with Reserve Bank of India through the reverse repo tender.  Demand was low as most banks had already met reserve needs well ahead of the reporting day, dealers said. RBI received Rs 23,400 crore at its reverse repo auction, compared with Rs 27,900 crore on Wednesday. "Banks will not want to keep idle cash with them. So later in the day, they will lend it at whatever rate they can get," said a dealer with a state-run bank.  Corp bonds: Volumes up
Trade volumes were up today as mutual funds sold 5-year bonds on fear of redemptions from banks and companies due to first instalment of corporate advance tax outflows next week, dealer said.  According to Fixed Income Money Market and Derivatives Association of India's (FIMMDA) reporting platform, around Rs 166 crore of corporate bonds were dealt today, compared with Rs 103 crore on Wednesday.  "Trade was limited up to 5-year segment today as most mutual funds were keen on selling corporate bonds on redemption pressure. Some insurance companies bought such 5-year bonds today," said a fund manager with a foreign bank owned mutual fund.  According to dealers, around Rs 15,000-20,000 crore will move out of the banking system from June 15 towards payment of corporate advance tax.  Typically, mutual funds face huge redemptions in their liquid schemes during advance tax payments as companies and banks withdraw their investments.  Yields were up by 1-2 basis points for 5-year bonds due to selling pressure.  Some insurance companies were buying such bonds as the yields rose 10-12 basis points this week owing to fuel price hike.