Call rates moved in a narrow range on Monday. It opened at 9 to 9.5 per cent, the same level as the previous closing. Most of the trade took place in 8.75 to 9.00 per cent range but moved up slightly towards closing from the intra-day low of 8.75 per cent to close at 9.00 per cent.

The Mumbai Interbank Average Overnight Rate, a weighted-average of traded rates from 16 banks and financial institutions, was at 8.98 per cent.

"The 9.0 per cent barrier is holding," said a primary dealer in government securities, referring to the rate at which banks can get refinance from the Reserve Bank of India (RBI).

Dealers said they expect call money to trade in the same range for the rest of the week as no major inflow or outflow is expected in the next few days.

FORECAST: The call rates are expected to open in the same range.

Spot Dollar

The rupee was range-bound in the inter-bank forex market today in a thin market. Dealers said that trades were dull. The Indian unit opened today at 39.14, slightly stronger and up from its previous close at 39.13. In later trades, the rupee was seen at 39.11 to the dollar levels.

"The market was thin. Even quotes for small amounts affected the rupee's value. Demand for the greenback though was subdued", said Credit Lyonnais corporate dealer, Pushkraj Gumaste.

"Year-end holiday mood also affected the inter-bank forex market. Most of the dealers have taken off. Corporate demand is also poor", said a dealer at a brokerage.

The rupee hit a low of 39.18 against the greenback with the high for the day being 39.11, at which level it closed finally.

The Reserve Bank of India had pegged its reference rate for the dollar at 39.17, unchanged from its Monday's fix.

FORECAST: Rupee to range in the 39.10-39-14 band on Wednesday

Forward PremiaThe Reserve Bank of India intervened in the forwards today. Dealers said that the central bank sold small amounts of January, February and March dollars to bring down forward covers for these months.

Near-term forward premiums fell by 3-4 paisa. December dollars finished the day at 2/4 paisa, February dollars at 36/30 paisa, March dollars at 99/102 from a bid quote of 110 at one point. April dollars closed at 137/140 paisa. On Monday, near-term forward cover quotes had fallen by about 10 paisa.

"The Reserve Bank's intervention in the near-term forwards was about $10-20 million", said a dealer.

Longer term forward cover also fell by about 10 paisa. July dollars closed at 205/210, August dollars at 235/240 paisa and September at 260/265 paisa.The six-month annualised forward cover closed lower at 9.21 per cent after opening at 9.62 per cent.

FORECAST: Expect near-term premiums to fall by another 2-3 paisa on Wednesday.

GiltsGovernment bond prices stayed almost at the same levels as the previous day. "The market remained quite dull during the day. There was an average increase in the prices of securities by about 5-10 paise", said a dealer with a private sector bank. "Call rates remained more or less stable today so there was no volatility in government securities," added another dealer. The wholesale debt market segment of the National Stock Exchange witnessed trades worth Rs 237.59 crore on Tuesday against the previous day's figure of 535.09 crore. The most actively traded securities were the 11.83 per cent 2003 government loan which saw trades worth Rs 30 crore and the 12.59 per cent 2004 government loan which was traded for Rs 55 crore. Repo trades worth Rs 55 crore were transacted with the rate varying between 8.50-8.80 per cent.

FORECAST: Securities prices are seen ruling at the same levels as on Tuesday.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.