Rupee fluctuates against dollar
Mumbai: The rupee fluctuated wildly against the dollar on Friday but closed the day almost unchanged at Thursday's levels. The currency opened at 44.25 and touched an intra-day high of 44.18 and later fell to a low of 44.38 but gained to close at 44.27, against Thursday's 44.25/26.

In forwards, the six-month closed at 3.60 per cent (3.76) and the 12-month ended at 2.93 per cent (3.03).

Bonds: Bond prices were range-bound. Total traded volumes on the order marching system stood at Rs1,260 crore (Rs730 crore).

G-secs: The 7.59 per cent 10-year 2016 paper opened at Rs99.74 (7.63 per cent YTM), touched a high of Rs99.88 (7.61 per cent YTM) and closed at Rs99.80 (7.62 per cent YTM), against the previous close of Rs99.70 (7.63 per cent YTM).

The 8.07 per cent 11-year 2017 paper opened and closed at Rs103.14 (7.62 per cent YTM) against the previous close of Rs103.09 (7.62 per cent YTM). It touched a high of Rs103.29 (7.59 per cent YTM) during the day.

Call rates: The interbank call rate (the overnight rate at which banks lend to one another), zoomed to touch 20 per cent on Friday. Dealers said such levels were last seen about nine years ago. On Friday, call rates opened at 12.5-13 per cent and closed at 18-19 per cent against Thursday's close of 12.25-12.75 per cent. They leaped to a high of 20.5 per cent intra-day. As against this, the RBI repo rate (the cost at which RBI lends money to banks) is fixed at 7.25 per cent.

Reverse repo: The RBI received and accepted 47 bids for Rs24,665 crore in the first four-day repo auction and 20 bids for Rs9,535 crore in the second auction.

There was only one reverse repo auction in the second liquidity adjustment facility (LAF) and there were three bids for Rs2,515 crore.

Bankers said that by raising the repo rate to 7.25 per cent in the mid-term review of the monetary policy, the RBI had not tinkered with rates; but the hike in CRR to 5.50 per cent (in two tranches) has started telling.
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Forex reserves rise $8.6bn in first half
Mumbai: Foreign exchange reserves rose by $8.6 billion on a balance of payment basis (excluding valuation) during the first half of 2006-07.

According to an an RBI release, foreign investment, external commercial borrowings and banking capital were the major sources of accretion to the country's foreign exchange reserves during the first half of the year.

A gain in valuation, which reflects the appreciation of major currencies against the dollar, accounted for a rise of $5.1 billion in total reserves during the period April to September 2006, against a drop in valuation $5 billion in the corresponding period in the previous year. This led to forex reserves recording an increase of $13.7 billion during the same period, compared to an increase of $1.5 billion in the previous year. India's reserve position in the IMF decreased by $2 million to $547 million.
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Federal Bank plans entry into capital market next fiscal
Kochi: Federal Bank plans to float a public issue next year to mobilise fresh resources to fund its strategic investment projects.
Federal Bank, in association with IDBI and international finance service provider Fortis, is set to launch a life insurance company to be called IDBI Fortis Life Insurance in which IDBI will hold 48 per cent equity, while Fortis and Federal Bank will hold 26 per cent each. The project is slated to become operational by February 2007, but may be delayed since IDBI is still awaiting final clearance from the Government. On its part, Federal Bank is slated to provide Rs190 crore over the next seven years as equity capital for the project.

The bank proposes to part-finance this project by tapping the capital market.
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Nabard to issue zero coupon bonds
Mumbai: Nabard plans to issue 10-year zero coupon bonds to raise Rs10,000 crore.

The funds would be used for investment in areas such as agriculture and rural development. The bonds will be issued at a discount and repaid at face value. The face value per bond will be Rs20,000. The bonds will be listed on Bombay Stock Exchange and investors will have option to sell the bonds in the secondary market. The income accrued on the bonds, i.e. the difference between maturity value and the amount of investment, will be treated as a capital gain and will be taxed accordingly, according to the release.

No tax will be deducted at source. The bonds will be available for subscription at all offices of Nabard and select bank branches.
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KVB offers higher rate on seniors' deposits
Coimbatore: Karur Vysya Bank (KVB) is offering 9.25 per cent interest on Senior Citizen Deposits, for period ranging between one and three years, said to be the highest in the industry. The bank has recently launched a deposit scheme — KVB 500.

The sums deposited under this scheme would attract interest at 9 per cent and for tenure of 500 days. The bank has increased the rate of interest on domestic term deposits by 50 to 75 basis points on various time brackets. It offers the highest rate of 8.75 per cent on deposits with tenure between 2 and 3 years, and at 8.5 per cent for the one to two-year deposits. The BPLR rate has also been hiked to 13.25 per cent (12.5 per cent). The bank has also filed the draft offer document with SEBI and the NSE for issue of rights shares.
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