The call rates moved in a narrow range on Tuesday. The overnight rates opened at 9-9.50 per cent, unchanged from their previous close.

Lower demand for funds saw the rates ease to 9.10 per cent by noon. At the close, the rates quoted at 9-9.25 per cent. "The inter-bank market is seen flush with liquidity over the next few days. An estimated Rs 9,000 crore is seen coming in with a maturing Rs 1,413 crore 11.25 per cent state government loan, Rs 66 crore from the 13.12 per cent 1999 and around Rs 7,000 crore via maturing repos," dealers said.

The Reserve Bank of India mopped up Rs 2,400 crore through three-day 8 per cent fixed-rate repos. The National Stock Exchange's Mibid and Mibor quoted at 9.50 per cent and 9.08 per cent respectively.

FORECAST: The call rates are seen in 9-10.50 per cent band on Wednesday.

Gilts

Short-dated gilt prices fell by 5-10 paise on Tuesday from their previous closing levels. The 11.55 per cent 2001 traded at Rs 100.12 (Rs100.14).

"Outflows of Rs 2,401 crore through the three-day 8 per cent repos and reports of State Bank selling Rs 30 crore of short-dated gilts in the noon drove prices lower," dealers said. The 11.55 per cent 2001 quoted at Rs 100.03-100.05 at the close and the 11.78 per cent 2003 at Rs 100.03-100.05 (Rs 100.10). "Trading is dull. Expectations of another Reserve Bank of India auction of two- and 10-year papers are affecting the trading sentiment," dealers said. The National Stock Exchange's wholesale debt market witnessed trades worth Rs 177.02 crore. Trades worth Rs 45 crore were seen in the 11.55 per cent 2001 at a weighted yield of 11.47 per cent.

FORECAST: Short-term gilt prices are seen at Tuesday's closing levels on Wednesday.

Spot Dollar

The forex market witnessed lacklustre trades on Tuesday owing to little corporate interest for the dollar.

The rupee opened at 42.50/51 compared with its previous close of 42.49/50. The local currency weakened to an intra-day low of 42.54/55on late demand for dollars from corporates.

Most players stayed away from the market. "There was little demand, excepting a late burst of demand from a corporate. Otherwise, the market was dull," a dealer from a private bank said. The Russian crisis had no effect on the rupee, treasury chiefs said. The Reserve Bank of India's directive to not use the RIB funds in the forex market continued to add to the sluggishness, dealers said. "The Reserve Bank's measures last Thursday have improved the mood. But there is a latent demand for dollars," a dealer said.

FORECAST: The rupee is seen between 42.45 and 42.54 on Wednesday.

Forward Premiums

Forward premiums fell on Tuesday morning but rose marginally on talks that the State Bank of India was seen paying dollars for October maturities.

September premiums finished at 39/41 paise (41/44 paise), October at 79/81 paise (81/85 paise) and November at 110/113 paise (115/119 paise). The annualised one-month cover came down considerably and quotedat 12.60 per cent (13.50 per cent), three months at 10.75 per cent (11.25 per cent), six months at 10.6 per cent (11 per cent) and one year also at 10.6 (11 per cent). "Premiums have gone marginally lower in the near terms largely because importers still find it stiff to cover at these levels... But dollar demand is intact," a dealer with a brokerage said.

FORECAST: The six-month annualised cover is seen at 10.40 per cent on Wednesday.