Re zooms to near 9-yr high of 41.85/$

MARKETS REPORT

Forex market

Outlook:
The trend is for appreciation and is likely to open at around 42 level on Tuesday.

Sentiment: Cautious

The spot rupee traded at Rs 42.50/ 51 in opening transactions. It later breached Rs 42-mark and touched a nine-year high of Rs 41.85 to close at the same level.

The annualised premiums for the six-month and one-year forwards closed at 6.45 per cent and 4.83 per cent, respectively.

Money market

Sentiment: Cautious

Liquidity came under severe strain on Monday.

Last week's bond auction of Rs 10,000 crore and a hike in cash reserve ratio by 25 basis points to 6.25 per cent from April 14 collectively drained about Rs 17,000 crore from the banking system.

The market is likely to experience tight liquidity conditions throughout the week.

The absence of dollar buying to protect the rupee by RBI has also added to the liquidity strain.

Reflecting a liquidity squeeze , call rates shot up to the 5.00-11.75 per cent range on Monday against 2.5-5.40 per cent on the previous trading day. The RBI infused Rs 13,695 crore on net basis through repo window of liquidity adjustment.