The overnight rates remained rangebound on Thursday. The call rates opened at 5 per cent, unchanged from their previous close. The rates were quoted at the opening level for most part of the day and finally closed at 5.05-5.10 per cent.

There were few borrowers in the call money market, dealers said. "Most banks have already taken positions as tomorrow is a reporting Friday," said a dealer from a private sector bank.

Some banks and primary dealers were also seen arbitraging between the call and securities market, dealers said.

The Reserve Bank of India mopped up Rs 2,050 crore through three-day fixed-rate repos. The weighted average call rate of the Security Trading Corporation of India was 5.05 per cent on a turnover of Rs 1,800 crore. The market support of the Discount Finance House of India was Rs 1,000 crore.

FORECAST: The call rates are expected to hover around 5-6 per cent on Friday.

Forward Premiums

State-run banks received heavily in the long forwards onThursday with exporters chipping in likewise. The six-month annualised forward cover closed at 7.6 per cent.(7.75 per cent) while the one-year annualised cover closed at 8.5 per cent (8.98 per cent). January dollars ended at 170/174 paise (80/183 paise), February at 200/203 paise (212/215 paise), March at 235/238 paise (245/247 paise) and April at 268/270 paise (275/277 paise).

"Premiums are expected to strengthen once the Reserve Bank announces a fresh set of export credit norms... most state-run banks are receiving heavily ahead of this as a result," dealers said. The Reserve Bank was rumoured to have received in December. "We have no confirmation on this... but if the central bank did receive, it must be to square off earlier forward dollar sales," a dealer in a European corporate bank said.

FORECAST: The six-month annualised forward cover is seen in the 7.59-7.65 per cent band on Friday.

Gilts

Short-dated government securities prices appreciated by 5 to 10 paise on Thursday. Sometrade took place in the three-year government paper maturing in 2001, offering an yield of 11.55 per cent, dealers said. Buying interest was also seen in other short-dated securities maturing in 1999 and 2000.

Most banks and primary dealers were seen forward trading the three-year paper to be issued on tap on Friday, dealers said. The wholesale debt market of the NSE witnessed trading worth Rs 252.64 crore. The 11.55 per cent government loan maturing in 2001 was traded worth Rs 50 crore. The 14-day treasury bills maturing on July 25, 1998, were traded worth Rs 6 crore at a yield of 6.25 per cent.

FORECAST: Prices in the government securities market are seen at Thursday's level on Friday.

Spot Dollar

The rupee posted small gains in early Thursday trades, but closed weaker than its opening quote.

The local currency opened at 42.52, stronger than its previous close of 42.58/59. Soon thereafter, the rupee was seen at its intra-day high of 42.50.

"News that US president Bill Clintonwill waive the sanctions selectively boosted sentiment in the spot market," dealers said. The rupee, however, lost strength in later day trades on fresh corporate demand for the greenback to close at 42.56. Cash/spot quoted at 0.50/1.25 paise, compared with its previous close of 0/0.25 paise, ahead of the reporting Friday. Cash/tom quoted at 0/0.25 paise (0/0.125 paise).

The Reserve Bank of India fixed its reference rate for the dollar at 42.52 against its previous fix of 42.60.

FORECAST: The rupee is seen in the 42.55-42.62 band on Friday.