Weekly Money Market Report : Sep 18th - Sep 22nd
The call rates were firm and were around 9% all the days. The call rates in the week opened at around 9.5-10 % and ended at 7.9-8.1%. Yields on the 91-day TBill and hte 364 day T-Bill fell sharply during the week. Government bond prices fell initially after the rupee touched an all time low of 45.99/46.01. The rupee's fall caused panic in the bond market with players selling to stay liquid. Almost all the repos were stagnant in the week and were fixed at 10 per cent. At one time, call rates were expected to fall back to 8 per cent levels, as call borrowings were accounted for arriving at CRR obligations. The detailed report follows:
Friday, 22nd September
Call money rates ended lower at 7.90-8.10 per cent on low demand for funds on reporting day. The overnight rates opened at 9-10 per cent, as against previous close of 9-9.5 per cent. The Reserve Bank of India maintained its cut-off rate for five-day repos at 10 per cent. The central bank accepted all the 36 bids for Rs 6,880 crore. For the five-day repos, the RBI rejected all the 12 bids for Rs 1,490 crore received at the auction. There was negligible demand for funds, as almost all the players had covered their positions ahead of reporting day. Bond prices closely tracked the rupee and ended lower. Bond mirrored the trend in the forex market, by rising 30 paise in the morning, but liquidating these gains amid a falling currency. The rupee ended at 46.21 per dollar, as against Thursday’s close of 46.14/17. The currency touched an intra-day high of 45.95 in the opening hours, but subsequently fell on heavy dollar demand. The 11.40 per cent 2008 bond ended at Rs.99.97, as against the previous close of 100.12.Call rates ended lower at 8.5-9%. The rates opened at 9.75%-10% unchanged from its previous close. RBI has manipulated its cut off rate for five day repos at 10% and accepted 10 bids for Rs.770 crore out of 12 bids for Rs.805 crore. The call rates touched a low of 8.5% amid some inflows from repo reversals coupled with nominal demand. Low bidding for repos also allowed the rates to come down. Government bonds tracked a firm rupee to end 10-20 paise higher. The 11.4% 2008 bonds ended at Rs.99.25 as compared to Tuesday's close of Rs.99.05. The 12.5% 2004 bond ended at Rs.104.35 as against the previous close of Rs.104.25. The RBI fixed the cut off yield for the 365 day treasury bill at 10.94%.
Tuesday, 19th September
Call rates ended firm at 9.75-10 percent amid concerns about liquidity following the rupee's fall in forex market and outflows of around Rs.6000 crore towards the repos. The rates opened higher at 9.75-10.25%, as against the previous close of 7.9-8.1%. The RBI maintained the cut off rate on both one and three day repos at 10%. For one day repos, the central bank received 27 bids for Rs.3990 crore and accepted 22 bids for Rs.3940 crore. For three day repos, the RBI accepted 18 bids out of 22 bids for Rs.2060 crore. The call rates were around 10% for most part of the day. One month deals were struck at 11.5-11.75% and three month deals at 12-12.5%. Government bonds ended lower by 30-40 paise on heavy selling to stay liquid in anticipation of further fall in the rupee's value. The 11.4% 2008 bond ended at Rs.99.04 as compared to Monday's close of Rs.99.30
Monday, 18th September
Call rates ended lower at 7.9-8 percent amid nominal demand for funds. The rates touched an intra day high of 10.15%, on heavy covering in the early trades. The rates opened at 9.5-10% as against the Saturday's close of 8-8.5%. The RBI maintained its repo rate for one day and three day repo auctions at 10%. For one day repos, it accepted 16 bids for Rs.1295 crore out of 17 bids for Rs.1305 crore. For three day repos, the central bank accepted 29 bids for Rs.7730 crore out of 31 bids for Rs.7750 crore. Government bond prices fell by 20-30 paise after the rupee touched an all time low of 45.99/46.01. The rupee's fall caused panic in the bond market with players selling to stay liquid.
K.Venu Babu