Power Grid issue, PFC bond inflows spur Re

MONEY MARKET ROUND-UP

Re ends at 40.56

The spot rupee opened stronger at 40.61/62 against its previous close of 40.66, propelled by inflows towards the IPO of Power Grid Corporation and the bond issue of Power Finance Corporation, said dealers. Foreign and private sector banks were selling dollars, which saw the rupee reaching a high of 40.54/55 before ending the day at 40.56/57 to a dollar.

Dealers said that at every upside of the rupee-dollar exchange rate, oil companies were seen buying dollars for oil payments . "If oil companies were not buying, the spot rupee could have touched 40.50 to a dollar, " said a dealer.

The annualised premium for booking forward dollars inched up higher and closed for six-month and one-year dollars at 1.62 per cent and 1.74 per cent against 1.29 per cent and 1.40 per cent on Tuesday respectively. The firming up of the annualised premiums is attributed to the perceived tightness in rupee liquidity.

Money: Liquidity stays comfortable

Liquidity remained comfortable but the market was apprehending a tightness after the advance tax outflows. According to the dealers, the RBI accepted around Rs 22,000 crore from the market against Rs 27,000 core on Monday.  Call, the rates at which banks lend and borrow for their daily fund requirement, closed around 6.05 per cent. The funding rates in the collateralised lending and borrowing market (CLBO) also remained around 6 per cent and marginally came down below 6 per cent to 5.95 per cent during the day.  As against daily volumes of Rs 19,000-20,000 crore , the CLBO market clocked transactions of only Rs 12,000 crore.  G-sec: Prices fall  There are couple of factors that bogged down the sentiment in the government securities market. Crude prices went up to a high of $78 a barrel and the expected advance tax outflows played spoilsport, said a dealer. Going by the decline in the amount of surplus liquidity parked under the reverse repo route, the market is nervous, he added.  OIS and corporate bonds: Advance tax blues  The interest rates on the short end of the maturity went up sharply by 10-15 basis points. There was cautious trading in the secondary market. In the long tenure category, investors are preferring to wait for newer issuances at higher rates. In the short term, mutual funds are facing redemption from corporate clients and banks, which have to get prepared for advance tax payments.  The three-year segment has witnessed yields moving up from 7.75 per cent to 8 per cent, followed by nine-month where yields have gone up from 8.50 per cent to 8.65 per cent. Similarly, the one-year segment is offering certificates of deposits and commercial papers at 8.95 per cent, which was 8.75 per cent on Monday.  Global markets: Dollar loses ground  Dollar lost to all major currencies following the weak non-farm payroll data and expectations of rate cut in the forthcoming interest rate policy meeting of the federal reserve . GBP and euro figured at $ 2.0333 ( $ 2.0320) and $1.3826 ( $ 1.38) . Yen was at $113.82 ( $ 113.55).