Call rates opened at 8-8.25 per cent on Friday, little changed from their previous close of 8-8.10 per cent. Overnight rates eased in the afternoon to close at 7.80-7.85 per cent as borrowers were comfortably liquid. "The system is flush with liquidity owing to disbursal of the first tranche of the Resurgent India Bonds to various banks," said a dealer from a nationalised bank.

An estimated Rs 7,000 crore, which is expected to flow out of the system by way of advance tax, is still circulating among various banks dealers said. About Rs 5,800 crore is locked in the Reserve Bank of India repos. Total inflow into the system through the RBI repos was Rs 1,789 crore and outflow was to the tune of Rs 2,800 crore. The STCI turnover was Rs 1,100 crore on a weighted average yield of 8.05 per cent.

Forecast: Call rates are seen in the 7-8 per cent band on Saturday.

Spot Dollar

The rupee remained rangebound against the dollar on Friday. The Indian currency opened at 42.52/53,unchanged from its previous close, and quoted in a thin 2-3 paise band throughout the day. The rupee touched an intra-day low of 42.54 towards the close owing to slight dollar-demand from a few corporates.

The rupee finally closed at this level. "Trades were dull," said a dealer from a foreign bank. State Bank of India traded aggressively on Friday. The Reserve Bank of India's reference rate for the dollar was Rs 42.53. "Exporters are not willing to sell at the current levels and there is not much dollar-demand from importers," forex dealers said.

Forecast: The rupee is seen between 42.51 and 42.56 on Saturday.

Forward Premiums

Forwards premiums fell across all maturities on Friday -- near-term premiums fell by 1-2 paise and far-end ones by 5-8 paise -- as State Bank of India and a few other banks received dollars. The six-month annualised premium quoted at 8 per cent, three months at 7.52 per cent and one month at 7.33 per cent. September premiums ended at 3-4 paise (4/6 paise),October at 27-29 paise (30/33 paise), November at 53/56 paise (59/62 paise), December at 83-86 paise (89/92 paise), January at 111-115 paise, February at 139-144 paise, March at 171-174 paise, April at 202-207 paise, May at 237-240 paise and July at 305-310 paise. "Importers are not covering as they expect the rates to go down further," dealers said.

Forecast: The six-month annualised forward cover is seen at 8.37-8.41 per cent on Friday.

Gilts

The government securities market remained steady on Friday. Prices of short-term gilts registered a 3-4 paise fall as few banks were seen offloading short-dated papers. "Most banks are not keen to buy short-term papers as they want to remain liquid," said a dealer.

The new 11.98 per cent 2004 government paper traded below par at Rs 99.90 (Rs 100). The zero coupon 1999 paper traded at Rs 96.95 (Rs 96.92), the 11.64 per cent 2000 paper at Rs 100.03-100.05 and the zero coupon 2000 paper at a yield of 11.34 per cent. The Reserve Bank of India iscurrently selling 91-day and 364-day treasury bills through its sale window.

Forecast: Short-term gilt prices are seen at Friday's levels on Saturday.