The overnight rates moved in a narrow range on Friday. The call money rates opened at 7.60-7.75 per cent, compared with their previous close of 7.00-7.25 per cent. For most part of the day, the rates ruled at 7.50-7.75 per cent. However, in the afternoon, they eased to finally close at 7.00-7.25 per cent. According to dealers, though not many lenders were seen in the market, a few private banks were seen borrowing.

"Foreign banks were not present in the market," said a dealer from a nationalised bank. There was enough liquidity in the system as the Reserve Bank of India mopped up Rs 200 crore through a three-day fixed-rate repo. The total turnover of the Securities Trading Corporation of India was Rs 2,500 crore on a weighted average of 7.43 per cent. The Discount Finance House of India extended market support to the tune of Rs 1,900 crore.

FORECAST: The call rates are likely to hover around 7.25-8 per cent on Saturday.

Spot Dollar

The rupee gained by 10 paise to settle at42.62/64 on Friday against the dollar, compared with its previous close of 42.72/74. The State Bank of India's late dollar selling in a lacklustre forex market saw the rupee appreciate.

The rupee opened at 42.72/74, but soon weakened by 5 paise on speculative demand. However, exporters' dollar selling and import cancellations led to the strengthening of the Indian unit to 42.70/72. The rupee finally closed at 42.62/64, registering a gain of 10 paise over the previous day's close.

According to dealers, the World Bank decision to approve a $506-million loan to Andhra Pradesh helped lift sentiments in the forex market. The market was very quiet and there was little dollar demand, which was met equally with dollar selling by exporters.

FORECAST: The rupee might strengthen and test the 42.50 mark on Monday as sentiments seem to improve.

Forward Premiums

The forward rupee remained steady on Friday, tracking the spot rupee. The six-month (annualised) forward rupee remained at the previous levels.Paying pressure was limited and was taken care of by importer cancellations and inter-bank receiving of premiums, dealers said.

"We expected some paying pressure to develop in the morning.... There is some $900 million worth of rollover to be done... Maybe, premiums will come under pressure later in the day ,'' a dealer with a private bank said. The six-month (annualised) forward premium closed at 11 per cent, at Thursday's close.

The one-month (annualised) forward eased marginally to close at 11.55 per cent (11.70 per cent) and the one-year forward closed at 10.68 per cent (10.70 per cent).

FORECAST: The six-month (annualised) forward premium is expected to rule at 10-10.5 per cent on Monday.

Gilts

Prices in the government securities market remained stable on Friday. At the shorter end, the prices improved marginally by 2-5 paise. However, not much activity was seen at the longer end.

Some deals were struck in the new on-tap 10-year paper 2008 at a coupon of 12.10 per cent, dealerssaid. However, there were no takers for the six-year on-tap paper in the market.

The wholesale debt market of the NSE witnessed trading worth Rs 132.03 crore. The 12.10 per cent government loan maturing in 2008 was traded for Rs 20 crore at a yield of 12.09 per cent. The 10.85 per cent government loan maturing in 2001 was traded for Rs 10 crore at a yield of 11.38 per cent.

The 91-day treasury bills maturing on July 4, 1998, were traded for Rs 14 crore at a yield of 7 per cent.

FORECAST: Prices in the government securities market are expected to remain at Friday's level on Saturday.