The overnight call money rates fell sharply owing to limited activity on Friday -- the reporting day. The short-term rates opened steady at 6 per cent and fell to 5-5.50 per cent. Later, they slid further owing to adequate liquidity and little demand to close at 4.75-5.25 per cent. "There is enough liquidity in the system, at least in the short term," said a chief dealer from a private sector bank.

The Reserve Bank of India mopped up Rs 7,046 crore at the fixed-rate repos. The total turnover of the Securities Trading Corporation of India was Rs 1,300 crore at a weighted average of 4.86 per cent. The Discount and Finance House of India extended market support of Rs 1,600 crore.

"Fresh inflows due to reversal of repos conducted last week and redemptions of coupons have placed liquidity in a comfortable position," said a dealer from a nationalised bank.

FORECAST: The call rates are likely to rule at Friday's levels on Saturday.

Spot Dollar

The rupee was firm against thedollar in a dull and listless market on Friday.

The rupee opened at 41.79, unchanged from its previous close, and held steady as corporate demand continued to be poor. The dollar's high for the day was 41.80 while its low was 41.79.

The State Bank of India sold dollars at 41.80, which also helped the rupee from weakening.

"FII stock purchases are seen turning negative... dollar inflows are expected to turn poor in the near term. The little dollar demand is being met from the State Bank window," dealers said.

The rupee quoted at 41.79 at the close. Elsewhere, the Reserve Bank of India maintained its reference rate for the greenback at 41.80.

FORECAST: The rupee is likely to weaken to 41.82-85 on Monday.

Forward Premiums

The six-month annualised premium weakened to 9.16 per cent on Friday, as against its previous close of 8.82 per cent.

Premiums weakened as there was a little importer and corporate covering pressure. A few banks were also seen squaring up their short positions. Exporterswere not bringing in their dollars as the spot rupee is being held firm by State Bank of India, dealers said.

"Fears that Moody's would downgrade India's country ceiling for forex and bank deposits also made the market jittery," a dealer with a brokerage said.Towards the close of trades, the State Bank of India sold dollars, which saw forward premiums close stronger by 5 paise over the previous levels.

June dollar ended at 12/15 paise, July at 43/46 paise, August at 76/79 paise, September at 110/113 paise and October at 145/148 paise.

FORECAST: The six-month annualised forward cover is seen at 9.15-9.20 per cent on Monday.

Gilts

The prices in the government securities market saw some movement on Friday. Sentiments improved in the morning but again turned bearish in the latter part of the day, dealers said. "The prices of securities went up by 10 paise in the morning but came down in the afternoon by 5 paise. So yields have come down marginally," a chief money-market dealer in a private banksaid.

The securities that saw some price movement included the 12.69 per cent security maturing in 2002, the 13.65 per cent gilt maturing in 1999, the 13.40 per cent gilt maturing in 1999 and the 11.50 per cent gilt maturing in 2004, dealers said.

"The fact that a private placement has taken place had improved sentiments but the rating outlooks by the international rating agencies saw the market turn bearish," a dealer said.

FORECAST: The prices in the government securities market are likely to fall marginally on Saturday.