Rupee makes marginal gains
Mumbai: The rupee made marginal gains on Monday against the greenback on the back of heavy dollar inflows.

The domestic currency opened at 44.34 and touched an intra-day high of 44.29. It, however, closed the day at 44.31/32, higher than Friday's close at 44.33. Dealers said that FII inflows in the market buoyed the home currency. However, public sector banks started buying dollars on behalf of RBI at the intra-day high of 44.29.

Forwards: In the forward premia market, the six-month premium closed at 2.95 per cent and the 12-month ended at 2.3 per cent.

Bonds: Bonds showed a bearish sentiment. The traded volume was low and prices fell by around 10 paise. Dealers said that the uncertainty about the Rs15,000-crore auction has affected the buying appetite in the market.

G-Secs: The 9.39 per cent - 5 year-2011 paper opened at Rs109.24 (7.26 per cent YTM) and closed at Rs109.15 (7.28 per cent YTM).The 8.07-11 year-2017 paper opened at Rs104.59 (7.44 per cent YTM) and closed at Rs104.32 (7.48 per cent YTM).

Call rate: The call rate closed on Monday at 6.75-6.80 per cent, a tad higher than the previous level of 6.40/50 per cent.

Reverse Repo: In the first one-day auction, the RBI did not receive any bids in the reverse repo. It received 20 bids for Rs9,110 crore in the repo. In the second auction, the RBI received and accepted three bids for Rs135 crore in reverse repo and nine bids for Rs3,535 crore in the repo auction.

CBLO: There were 276 trades for Rs21,293.95 crore in the 6.35-6.51 per cent range.
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Tight liquidity leads banks to go for dollar swaps
Mumbai: Tight liquidity situation in the domestic market has led banks to raise dollar resources overseas and encash it to raise rupees for their requirement. Sources say banks across the board are swapping dollars borrowed overseas into rupees at a cheaper rate as compared to the cost at which deposits can be mobilised from the domestic market.

While banks can raise one-year deposits at 8.5/8.75 per cent in India, they can raise dollars overseas at one year Libor rate of 5.16 per cent. Libor is the international interest rate benchmark.

These dollars then get converted into rupees at a swap rate of 1.9/2 per cent which makes the conversion cost at 7.16/7.2 per cent as against 8.5 per cent offered for one year deposits.

This has further pushed up the rate for premium to be paid for booking forward dollars.

Since banks are paying for borrowing dollars and converting them into rupees, rupee cost for banks have gone up. Therefore, customers have to borrow dollars at very high rate to book dollars in the forward market especially in the far end of the maturity - six month and one year.

The 12-month dollar today reached a 16-month high to 2.28 per cent against a close of 2.10 per cent last week. Six-month forward dollars closed at 3.1 per cent against a close of 2.25 per cent last week.
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ING Vysya to issue bonds to raise Rs50-crore
Kolkata: ING Vysya Bank plans to raise Rs50 crore from the bond market to augment its Tier-II capital before the end of the current fiscal. The bank is offering 8.75 per cent for its 110-month issue, a rate that is possibly the highest in the last several years for a top rated paper.

According to market sources, the bank has decided to offer a high rate in the light of the tight liquidity situation. The issue will remain open till March 14.

This rate may also set the trend for companies and banks planning to mobilise funds before the close of the financial year. Two public sector banks, namely Uco Bank and Central Bank of India, are expected to finalise their Tier-II capital mobilisation plan in this week.
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IDBI signs up with Fortis as life insurance JV partner
Mumbai: IDBI Bank has signed up European bancassurance group Fortis as its partner, in its foray into the life insurance business. The memorandum of understanding between the two partners will be signed on Tuesday and there may be a third partner in the business well.

In a notice to the stock exchange on Monday, IDBI said the board has taken "in principle" decision for entering into an MoU with Fortis Insurance International NV (Fortis), a company incorporated under the laws of the Netherlands with its registered seat at Utrech.

It added that the incorporation of a joint venture life insurance company would be subject to the regulatory, statutory approvals and corporate approvals of Fortis.
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ANZ to re-enter India
New Delhi: Australian banking major ANZ is eyeing a return to India and plans to pick up a token 5 per cent stake in an Indian private sector bank later this year. It will also increase the capacity of its software technology centre in Bangalore to 1,000 by year-end, from 600 now.

The bank is looking for an Indian partner where it would pick up 5 per cent stake in line with the Reserve Bank of India's guidelines for FDI in the banking sector. The bank may look at hiking its stake to upto 20-30 per cent in the Indian bank over time.

It is being said that the bank is likely to pick up between 5 per cent to 10 per cent minority stake in IndusInd Bank for about $30 million.

ANZ's decision for an Indian re-entry is part of its global strategy, where Asian markets have been identified as having potential to propel quicker growth. The company picked up a 19.9 per cent stake in Tianjin City Commercial Bank in China and is talks to pick up equity in Shanghai Bank. It has also entered markets in Indonesia, Vietnam, Philippines and Cambodia by partnering with local banks.

The company is also planning to expand its software technology centre in Bangalore, where it employs 600 people.
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