The overnight call money interest rates ruled slightly easy in the interbank call money market on Tuesday. The rates opened lower at 7.50-7.75 per cent from the previous close of 8.50-9.00 per cent and moved upto 8.25 per cent in the morning on good demand for funds from money market players.

"They had to square up their position," a dealer said. Later the rates eased on enough liquidity and lower demand to a low of 7.20 per cent and closed at 7.50-8.0 per cent.

The outflow on repos was amounted to Rs 175 crore, dealers said adding that most of the deals were struck between 7.75 and 8.00 per cent.

The total turnover of Securities Trading Corporation of India was Rs 2,300 crore and their weighted average rate was quoted at 7.75 per cent. The Discount Finance House of India extended market support of Rs 1,400 croretoday.

FORECAST: Call rates are expected to ease further on Wednesday.

Spot Dollar

The rupee plunged to an all-time low of 43.38 today, lower by 21 paise from its previous close. The demand for greenback was triggered by finance minister Yashwant Sinha's statement that domestic bourses and currency markets would be affected by international developments.

Opening the day at 43.23/25 from its overnight close of 43.16/17, good corporate demand for dollar saw the local currency quote at 43.34/35 levels. State Bank of India sold dollars at these levels, helping the rupee recover to 43.30.

The rupee's recovery was, however, brief and in the later day deals, the rupee was seen trading at an intra-day low of 43.38.

"Dollar inflows are poor...sentiment on the rupee is poor with the worsening political situation and a rouble crisis", a dealer said. At close, the rupee quoted at 43.35, which was also its lowest-ever finish.

FORECAST: Rupee to hit a new low on Wednesday; seen quoting between 43.39 and 43.47.

Forward Premiums

Forward premiums ended firmer across all maturities today. Near-terms were up by 4-5 paise, but forward dollar beyond six months closed 10-15 higher from their overnight finishes.

January premiums finished 175/178 paise, February at 207/210 paise, March at 245/250 paise and April at 282/285 paise.

The six-month annualised forward closed at 9.01 per cent, up from Tuesday's 8.46 per cent. "There was quite a bit of paying in the longer maturities. A few corporates were also seen receiving and paying later...but exporters are holding back", dealers said.

Call rates ended at 7.25-7.75 per cent today, lower from its previous close of 8.00-9.00 per cent, but forwards were up in line with a weaker spot rupee.

Premiums are seen going higher later in the week with a tightening in call rates.

FORECAST: Six-month annualised cover seen at 9.10-9.15 per cent levels on Wednesday.

Gilts

Bond prices edged lower on higher call money rates and a new bond sale price list announced by the central bank on Tuesday, dealers said.

Bond prices fell in the morning as traders sold to fund call money requirements and to switch to the bonds on the RBI's sale list, dealers said.

The 11.55 per cent 2001 bond dropped to Rs 100.14/17 from the previous 100.22/24. Call rates eased on account of the redemption of the 13.65 per cent 1998 bond.

"This inflow was expected to improve liquidity to a large extent. Now, that may not happen since the Reserve Bank of India's securities sale on tap is expected to suck out excess liquidity," said a satellite dealer.

The Reserve Bank of India said on Monday that it will sell the 12.40 per cent 2013 paper on tap from August 20.