RBI mops up Rs 1,900 crore

On Monday, the RBI’s announcement of 50 basis points cut in CRR saw the six-month annualised cover sliding in kerb deals at 6.49 per cent compared to its previous official close at 7.80 per cent. Dealers said the six-month annualisedcover dipped to 6.8 per cent but closed at 7.24 per cent on account of profit-taking by banks and slight importer covering.

The central bank today exhausted its stock of 12.69 per cent gilt maturing in 2002 as banks rushed to buy this high coupon security from the RBI. Apex bank sources confirmed that the stock of this security is over triggered by large demand. Consequently, the price of this security went up to Rs 104.80 from RBI’s sale price of Rs 104.47. However, prices of other securities crashed over yesterday’s kerb closures.

The other high-coupon security the 13.05 per cent gilt maturing in 2007 is also likely to be exhausted, market sources said. Although the market was expecting the bond market to trade actively after the CRR cut, the RBI sale list acted as a dampner. "The prices indicated are below market expectation which is why nobody is trading," a dealer in a brokerage said. Bankers expect the RBI to revise the price list of the securities before the fiscal comes to an end.

Prices ofsecurities reacted on the kerb on Monday after the RBI decided to cut the CRR by 50 basis points to 10 per cent over a staggered period starting March 28. The 13.05 per cent gilt maturing in 2007 traded at 107 level on Monday came down to trade at RBI’s benchmark rate of 105.52, depicting a YTM of 12.03 per cent.

In the forward market, March premiums closed at 2/3 paise, April at 25/29 paise and May at 42/47 paise. “There was not much difference from the opening and closing quotes for March and April premiums. TheRBI made outright purchases of the greenback for March and April premiums…but it must have been for small amounts,” said a dealer with a European bank.

The one-month annualised forward cover finished at 6.96 per cent while two-months went at 6.44 at close of trades. Most inter-bank dealers expect the premiums to fall further and the six-month annualised forward cover to go at 6 per cent levels soon.