Re ends stronger at 42.85/$

MARKETS REPORT

Forex Market

Outlook:
The dollar may show a tendency towards appreciation.

Sentiment:Cautious

The spot rupee opened at Rs 42.96/ 97 and closed at Rs 42.82/85

The annualised premiums for the six-month and one-year forwards closed at 4.96 per cent and 4.02 per cent, respectively

Money Market

Sentiment: Cautious

Liquidity remained comfortable on Tuesday.

The government spending has infused funds in the banking system. Some banks with surplus cash put bids to park funds with the Reserve Bank of India (RBI). But the central bank has put a ceiling of Rs 3,000 crore on daily absorption through LAF.

The ample liquidity condition seems to be temporary as the government bond auction (Rs 10,000 crore) and the rise in cash reserve ratio (CRR) will absorb Rs 17,000 crore this week.

The yield on the 10-year government paper (8.07 per cent 2017 bond) at the close was 8.02 per cent compared with 8.12 per cent yesterday.

Call rates eased and remained in the 5-6.75 per cent range. The RBI absorbed Rs 3,000 crore on net basis through LAF though banks had put bids to park over Rs 29,000 crore.