Calls, Gilt Yields Remain Steady
Interest rates in the inter-bank call money market ranged between 9 and 10 per cent yesterday while yields on government securities remained steady.
With refinance facility available from Reserve Bank at 10 per cent, a couple of banks have reportedly taken recourse to this facility. There was an outflow of Rs 4,685.86 crore on account of the sale of 12.59 per cent 2004 on tap and the market now does not appear to be sure about the extent of liquidity in the banking system.
A clearer picture should emerge by observing the quantum of bids tendered at the repos auction to be held today.
The forward dollar segment was steady yesterday and remained soft through the day to close at around 3.7 per cent after opening at 3.75 per cent.
Market sources said that this softening was despite the fact that receiving pressure was limited. Exporters who were expected in the market kept out of the market as the rates were not attractive.
A forex dealer said, The exporters are waiting for some spikes in theforward premiums before they come into the market. Rates are expected to strengthen in the next couple of days. The spot market was not impacted by the cut in the bank rate with the rupee opening and closing at 35.81-82 touching an intra-day high of 35.83.
The secondary market yield on gilts was steady despite the government raising more than Rs 6,688.86 crore on Wednesday through the the 12.59 per cent 2004.
The yield on this paper yesterday remained unchanged from Wednesdays 12.53. It is expected that the price of this security will move up in the next few days and the yield will be pushed down further. At the same time, the attention of the market is likely to turn towards the 13.05 per cent 2007, which is trading at a yield of around 12.60 per cent.
Corporates are reworking their plans to privately place debt with two corporates, Finolex cables and Gridco, with both companies postponing their issues after the one per cent cut in the bank rate. While the current benchmark for a five-year paper is the band of 14.25 per cent to 14.5 per cent, corporates expect this to come down by at least 50 basis points.
Hence some of them have already postponed their offerings on the advice of their merchant bankers.