The overnight call money rates remained easy on Friday. The rates opened at 6.50-7.00 per cent, as against their previous close of 6.00-6.10 per cent. However, they weakened in the afternoon and ruled at 6.25-6.75 per cent for most part of the day. They finally closed at 6.00-6.25 per cent, dealers said.

The market was easy due to adequate liquidity in the system, dealers said.The Reserve Bank of India mopped up Rs 1,758 crore through a four-day fixed-rate repos in government of India dated securities. The central bank received nine applications and accepted all of them.

The Securities Trading Corporation of India's total turnover was Rs 1,700 crore at a weighted average of 6.37 per cent. The Discount and Finance House of India extended market support to the tune of Rs 1,500 crore.

FORECAST: The call rates are expected to hover around 6-6.25 per cent on Saturday.

Spot Dollar

The rupee opened at 41.45/75 on Friday, compared with its previous close of 41.35/40, andweakened to trade at 41.45/50 immediately on speculative buying by banks. Nervousness gripped the market as banks reacted in a knee-jerk manner to Pakistan's nuclear tests on Thursday. At this level, however, the State Bank of India (SBI) came in to sell dollars to prop up the rupee.

But as soon as it exited, the rupee weakened considerably to trade at 41.77/80. Once again, at this level, the SBI entered and sold dollars, which saw the rupee appreciate to 41.62/65. However, genuine importers came in to buy dollars at this level, which saw the rupee depreciate marginally to close at 41.65/70. The RBI continued to stay away from the market and the SBI intervened on behalf of the central bank.

FORECAST: The rupee is likely to test the 42 levels on Monday.

Forward Premiums

The six-month annualised forward cover weakened to 9.05 per cent on Friday from the previous close of 8.60 per cent. The premiums opened weaker as they were tracking the spot rupee and fell further as foreign banks startedpaying on behalf of their clients. At one point, the six-month forward (annualised) cover touched 9.50 per cent. "The forwards are quite high as compared to the call rates," a dealer in a foreign bank said. Towards the close, the forwards strengthened on receiving pressure, largely from the State Bank of India.

"There was a lot of volatility in the forward market as it was tracking the spot rupee," dealers said. The spot rupee weakened as the markets reacted nervously to the nuclear tests carried out by Pakistan.

FORECAST: The six-month annualised forward cover is seen at 9-10 levels on Monday.

Gilts

The prices in the government securities market registered a fall of 10 paise at the longer end and 25-30 paise at the shorter end on Friday.

According to dealers, the market witnessed little activity and the situation is likely to continue till the budget announcement.

"Not much activity was seen in the government securities market on Friday as the market is waiting for the budget," adealer said.

The wholesale debt market of the National Stock Exchange witnessed trades worth Rs 367.38 crore. The 12.69 per cent government loan maturing in 2002 was traded for Rs 60 crore at a weighted yield of 11.58 percent. The floating rate government bond maturing in 1999 was traded for Rs 50 crore at a weighted yield of 11.16 per cent.

FORECAST: The prices in the government securities market are likely to rule at Friday's level on Saturday.