The overnight call money rates opened at 6-6.10 per cent on Tuesday, unchanged from their previous close. Later, they firmed up to 7 per cent owing to uncertainty in the forex market and an outflow of Rs 5,000 crore for the repos held on Monday. They finally settled at 6.75-7 per cent.

There were some stray deals at 7.5 per cent, a dealer said. "The call rates initially witnessed good demand and an equal supply to match it. But later the supply lessened," dealers said. The Securities Trading Corporation of India's total turnover amounted to Rs 2,300 crore and the weighted average rate was pegged at 6.32 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 likely to hover at 6.50-7 per cent on Wednesday.

Spot Dollar

The rupee hit a historic low of 42.25 against the dollar on Tuesday.

It opened at 41.79/80 and crossed the 42 mark to touch 42.15 with the State Bank of India (SBI) holdingback on its dollar-selling. Finance secretary Montek Singh Ahluwalia's statement that the Reserve Bank of India (RBI) was regulating the country's forex market saw the rupee recover a bit to 42.08/11.

"For most of last week, the SBI's dollar sales had set a floor for the rupee at 41.80 levels, which gave way on Tuesday," dealers said.

Corporate dollar demand for the greenback saw the rupee weaken to an all-time low of 41.25. But, profit-taking by banks saw the rupee strengthen to 42.21. It finally closed at 41.23/24.

Elsewhere, the RBI fixed its reference rate for the greenback at 42.15, compared with its previous peg of 41.80.

FORECAST: The rupee is seen at 42.20-42.40 on Wednesday.

Forward Premiums

Forward premiums opened higher on Tuesday, but came off early highs by the close of trades. The six-month annualised forward cover ended at 10 per cent, lower than its intra-day high of 10.50 per cent.

Dealers said that there was panic-covering when the rupee crossed the 42 mark. Laterin the day, state-run banks were seen receiving which helped forwards come down substantially.

November premiums opened higher at 208/210 paise and closed at 193/195 paise. Premiums dropped by around 7-10 paise from early levels -- December premiums finished at 233/236 paise, February at 309/313 paise and March at 347/352 paise. The one-month annualised forward cover ended at 8.9 per cent, lower than its last close of 8.25 per cent, while the two-month cover ended at 9.5 per cent, up from 9.25 per cent.

FORECAST: The six-month annualised forward cover is seen fluctuating in a wide 9.50-10.50 per cent band.

Gilts

The prices in the government securities market fell by 15-20 paise across all maturities on Tuesday. According to dealers, there was selling interest though the market was dull.

"More demand was witnessed at the shorter end and some trade took place in securities maturing in 1999 and 2000," dealers said.

The wholesale debt market of the NSE witnessed trading worth Rs 298.70crore. The 13.55 per cent government loan maturing in 2001 was traded for Rs 85 crore at a weighted yield of 11.63 per cent. The 13.65 per cent government loan maturing in 1999 was traded for Rs 20 crore at a weighted yield of 10.22 per cent. The 14-day treasury bills maturing on June 20 were traded for Rs 6.50 crore at a weighted yield of 6 per cent.

FORECAST: The prices in the government securities market are expected to move southwards.