The call rates remained rangebound on Wednesday. The overnight rates opened at 9-9.25 per cent, unchanged from their previous close.The rates tightened in the afternoon as few lenders were present in the market and finally closed at 9.50 per cent.

Most deals were struck at 9.25-9.50 per cent, dealers said. In spite of excess liquidity in the system, the Reserve Bank of India mopped up only Rs 25 crore from three-day repos.

"There was little lending in call as the market expected a short-term paper in the morning," dealers said.

"The system is flush with funds. Around Rs 1,478 crore came into the system due to the maturity of the 11.25 per cent state government loan and interest payment of the 9.75 per cent 1998 paper. On Friday, around Rs 7,000 crore is expected to flow into the system via the maturing repos," dealers said.
FORECAST: The call rates are seen in the 9-9.50 per cent band on Thursday.

Spot Dollar

The forex market remained rangebound on Thursday. Therupee opened at 42.52/53 against the dollar compared with its previous close of 42.54.The Indian currency rose to 42.53/55 during the day, but finally closed at the opening level of 42.52/53. The rates ruled steady owing to little corporate demand for funds, forex dealers said. "Comfortable liquidity in the system combined with the fact that importers have already covered their positions has resulted is a fall in demand," dealers said.

"The market was dull," said a dealer from a foreign bank. The Reserve Bank of India's reference rate for the dollar was Rs 42.52 (Rs 42.55).
FORECAST: The rupee is seen between 42.51 and 42.55 on Thursday.

Forward Premiums

Forward premiums fell by 15-20 paise on Wednesday owing to dull trading in the spot market. forward dollar premiums were 32-39 paise for September, 69-66 paise for October, 101-97 paise for November, 134-130 paise for December, 170-165 paise for January, 204-201 paise for February, 244-240 paise for March, 284-280 paise for April,325-321 paise for May, 361-356 paise for June, 397-393 paise for July and 435-428 paise for August. The cash spot traded between 1.25 and 1.75 paise. The six-month annualised premium quoted at 10.49 per cent and the one-year premium at 10.63 per cent (10.6 per cent). "Premiums have gone marginally lower in the near terms largely because importers still find it difficult 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 10.30 per cent on Thursday.

Gilts

The gilts market registered lacklustre trades on Wednesday. Prices of short-dated gilts fell by 10-15 paise compared with their previous closes. Selling pressure was seen in 11.55 2001, zero coupon 2000 and 12 per cent 1999 paper, dealers said.

"Most foreign banks were seen selling short-term gilts in the morning as the market expected a short-term paper which resulted in a 10-15 paise fall in short-term gilt prices," dealers said.

The 12 percent 1999 quoted at Rs 100.10 (Rs 100.20), 11.55 at 100.04 (100.08), zero 2000 paper at Rs 81-90 and zero 1999 at Rs 96.40.

"Due to the fall in short-term gilt prices, yields have gone up by 4-5 basis points. However this situation is likely to stabilise on Thursday," dealers said.

The wholesale debt market of the NSE witnessed trades worth Rs 251.20 crore.
FORECAST: Short-term gilt prices are expected to appreciate by 5-10 paise on Thursday.