Call rates firmed up to over 9 per cent levels on Tuesday. oPENING THE DAY at 8.70-8.80 per cent levels, unchanged from its earlier close, call rates ruled in the 8.82-8.95 band for most of the day. Lacklustre demand for funds saw call rates go to a low of 8.70 per cent levels.

However, towards close of trades, call rates rose to a high of 9.10 per cent thereabouts.

"There was no clear reason for rates to firm up...it is possible that a few large banks turned borrowers to square up their short-positions", a dealer at a European bank said.

Others surmised that a relatively tight-position appeared to prevail in the inter-bank money markets given that the Reserve Bank had mopped upRs 2,250 crore through a fixed-rate repos on Monday. At today's 8 per cent fixed rate three-day repos, response was poor with just a single bid for Rs 1 crore.

FORECAST: Call rates seen in the 8.75-8.90 per cent band on Wednesday.

Spot Dollar

The rupee gained by around 2 paise from its lastclose on Tuesday. Opening the day at 42.45/47, the rupee quoted in the 42.46-42.45 band for most of the day. In early trades, the local currency gained to an intra-day high of 42.43/44 levels.

Fresh corporate dollar demand saw the rupee dip to 42.45 where it closed for the day.

"A fair bit of active two-way trades were seen today...the State Bank of India reportedly bid for dollars", a dealer at a brokerage said. Cash/spot went at 1/1.25 paise with cash/tom at 0.50/0.75 paise. The Reserve Bank pegged its reference for the dollar at 42.44 as against its previous fix of 42.47. Meanwhile, the rupee opened lower at 47.99 (47.76) against the Euro before closing at 48.02 (47.70).

FORECAST: Rupee seen in a band of 42.45-42.52 on Wednesday.

Forward Premiums

Forward premiums came under slight pressure towards the fag end of the day with the six-month annualised forward cover going up to 6.90 per cent as against its last finish at 6.57 per cent.

"Reports of the Indian National Lok Dalwithdrawing its support to the BJP-led government created ripples. Premiums would have closed softer, but for this", dealers said.

"A few exporters were also seen making enquiries for receiving premiums", dealers said. In the near terms, March dollars closed at 30/33 paise (32-34 paise) with April at 58/60 paise (57-59 paise). In the far forwards, August closed at 161/163 paise (157-159 paise), September at 188/190 paise (186-189 paise), October at 213/216 paise (211-213 paise) and November at 241/244 paise (239-242 paise).

FORECAST: Six-month annualised cover seen at 7 per cent on Wednesday on political unrest.

Gilts

Dull trades were seen in bond markets on Tuesday. "There was a bit of selling when call rates inched upwards, but on the whole bond prices held steady", dealers said.

The 11.40 per cent gilt maturing in 2000 was traded between Rs 100.20 and Rs 100.30. The 11.75 per cent 2001 paper went slightly higher at Rs 100.74 (Rs 100.73) with the 11.68 per cent 2002 paper at goingbetween Rs 100.22 and Rs 100.24. Trades were also seen in the 11.64 per cent 2000 paper at Rs 100.73-100.76 (Rs 100.72). At the wholesale debt market segment of the National Stock Exchange, trades were up at Rs 437.27 crore (Rs 340.35 crore). The 11.55 per cent 2001 saw trades worth Rs 75 crore with those in the the 11.40 per cent 2000 at Rs 45 crore. Trades worth Rs 25 crore were seen in the 91-day T-bill maturing on 6 March'99.

FORECAST: Bond prices may soften on Wednesday.