Re loses 14 paise, call rates crash

MUMBAI: Liquidity seems to have made a comeback to the banking system on Thursday, as banks ended up parking funds worth Rs 4,000 crore with the Reserve Bank of India, exactly a day after the central bank had infused more than Rs 30,000 crore through its repo window.

Consequently, rates in both the inter-bank call money market and the market for collateralised operations crashed to around 1% levels during the day. Call rates closed at 5%, while rates in the CBLO market ended at 4% levels.

Seeking relief from the improving cash conditions, bond yields ended a tad lower than their previous closing levels. The yield on the benchmark paper, the 7.99% bond maturing in 2017, ended at 7.88%, a notch below Wednesday’s close of 7.89%.

The rupee, which took cues from the stock market and risk aversion among global investors, ended the day 14 paise lower. It closed at 39.53/54 levels per dollar, reaching almost a one-month low. On Wednesday, the rupee had closed at 39.39 levels. The local currency had risen to 39.16 levels per dollar earlier this month.

RBI deputy governor Rakesh Mohan reiterated on Thursday that the central bank actively intervened in the market, which also hurt sentiment in the forex market.

Yields on forward contracts dipped on Thursday, with the yield on the one-month contract closing at 2.59% (2.88%) and that on the six-month contract ending at 1.54% (1.68%). The annualised premia closed at 1.22% (1.25%).