In the foreign exchange market, the premia on forward dollars shot up as a result of the liquidity crunch and pressure from the banks.
The premia on six month and one year forward dollars went up to 0.44 per cent and 0.53 per cent from 0.22 per cent and 0.35 per cent, repectively, on Monday.
Call rates too zoomed to six per cent amidst the acute liquidity shortage, triggered by state-run banks becoming net borrowers (they are usually lenders).
The spot rupee opened at 45.40/42 to a dollar but closed at a three-week high at 45.31/32, backed by the substantial foreign inflows which poured in during the end of the day.
But corporate demand forced the spot rupee to lows of 45.45 to a dollar. In the gilts market, selling by bond dealers led to a fall of almost Rs 2 in the prices of long term paper and Re 1 in the prices of medium term papers.
Most banks had bought heavily in earlier weeks expecting a repo rate cut in the ensuing credit policy and had to provide for reserve requirements proportionately. So the reserve maintainance to fund these positions on a daily basis has also substantially gone up this week.
The 10-year benchmark 7.27 per cent 2013 closed at a high of 5.18 per cent as against 5.13 per cent on Monday.
Dealers said that while almost Rs 13,000 crore had been sucked out of the system through open market operations in three occasions in the weeks before, around Rs 11,500 crores has been sucked out by the auction of central government and state development loans. Besides, the newly introduced 28-day repo added to the tightness.
