The overnight call money rates firmed up marginally on Thursday. The rates opened slightly lower at 5.05-5.10 per cent, compared with their previous close of 5.10-5.25 per cent. They ruled in a narrow range of 5.10-5.25 per cent for most part of the day. There was enough liquidity in the system to match the demand, dealers said. However, as the demand for funds increased in later trades, the rates rose to close at 5.25-5.75 per cent.

The Reserve Bank of India mopped up Rs 2,624 crore through a four-day fixed-rate repos in government of India dated security for parties holding SGL and current accounts. The total turnover of the Securities Trading Corporation of India was Rs 1,500 crore and the weighted average interest rate was calculated at 5.09 per cent. The Discount and Finance House of India extended Rs 1,400-crore support to the market.

FORECAST: The call rates are likely to hover at Thursday's level onFriday.

Spot Dollar

The rupee gained in early trades onThursday, but closed weaker at 42.21/22, compared with its previous close of 42.14/17. The rupee opened at 41.95/42.05 and good dollar supplies saw it touch an intra-day high of 41.88.

"Finance secretary Montek Singh Ahluwalia's statement that the rupee will stabilise at 42 improved market sentiment in initial trades. Fears of another Asian crisis abated as news of the yen gaining to 136 to the dollar from 142 hit the market," dealers said. At 41.88, the State Bank of India (SBI) bought dollars. "SBI made dollar purchases all the way up to 42.15/16," dealers said. Towards the close, the rupee came under more pressure as banks bid for the greenback aggressively to cover their short positions. Cash/spot closed at 6/8 paise while cash/tom closed at 0.15/0.75 paise. The Reserve Bank of India pegged its reference rate for the greenback at 42.09, compared with its last fix of 42.25.

FORECAST: The rupee is seen at 42.20-30 on Friday.

Forward Premiums

The six-month annualised forward coverclosed at 11.57 per cent, compared with its overnight close of 12.33 per cent.

"Heavy receiving by exporters saw forward premiums come off their overnight highs... a few importers also cancelled their forward contracts," dealers said.

March dollars closed at 375/380 paise from their Wednesday's finish of 390/395 paise, April at 409/413 paise (425/430 paise) and May at 440/445 paise (457/463 paise).

"Exporters rushed in to encash their dollars," said Mecklai Financial Services senior vice-president KN Dey.

The one-month annualised forward premium ended at 14.56 per cent (15.12 per cent), two-months at 13.23 per cent (14.17 per cent) and three months at 12.44 per cent (13.18 per cent).

FORECAST: The six-month annualised forward cover is seen at 12.20-12.30 per cent on Friday.

Gilts

The government securities market witnessed little activity on Thursday and the prices remained stable, dealers said.

"The market was dull and traders were not taking positions," a dealer said. Thewholesale debt market of the NSE witnessed trading worth Rs 514.50 crore. The 11.64 per cent government loan maturing in 200 was traded for Rs 75 crore at a weighted yield of 11.06 per cent. The zero coupon government loan maturing in 1999 was traded for Rs 40 crore at a weighted yield of 10.02 per cent. The 364-day treasury bills maturing on July 3 were traded for Rs 10 crore at a yield of 6.50 per cent. Seven repos trades totalling Rs 165 crore were conducted at 7.40-7.75 per cent for a repos term of 14 days.

FORECAST: The prices in the government securities market are expected to remain at Thursday's level on Friday.