The overnight rates remained rangebound on Wednesday. The call rates opened at 9.15 per cent compared with their previous close of 8.25-8.30 per cent.

"Later, the rates eased to 8.75-8.80 per cent on absence of borrowers who had already taken positions, Friday being the reporting day," dealers said. However, the rates tightened to 9.10-9.25 per cent at the close.

"Towards the close of trades, some banks were seen borrowing funds after clearing a few high-value cheques," dealers said. The Reserve Bank of India mopped up Rs 505 crore through its three-day 8 per cent fixed-rate repos. "Liquidity is confined in the hands of a few lenders," sources said.

The Security Trading Corporation of India's turnover was Rs 1,200 crore on a weighted average rate of 8.92 per cent.

FORECAST: The call rates are seen in the 8.70-9.25 per cent band on Thursday.

Spot Dollar

The spot rupee moved in a thin range on Wednesday. The Indian currency opened at 42.54/55 against the dollar compared with its previous close of 42.55/56.

There was little demand from banks and corporates, dealers said. "Most banks and corporates, in fact, sold in the spot," they said.

The rupee held steady at 42.54/55 throughout the day and finally closed at 42.53/55.

"Selling by exporters and absence of covering by importers led to appreciation in the rupee," dealers said. The rupee ruled steady owing to the absence of State Bank of India and a negligible dollar-demand from banks and corporates.

FORECAST: The rupee is seen between 42.53 and 42.55 on Thursday.

Forward Premiums

Forward premiums eased across the board by 2-3 paise on Wednesday morning, but recovered later in the day. Premiums fell on selling by banks and corporates. However, towards the close, premiums moved up marginally on banks' paying interest in forwards.

"Importers are not interested to cover at the existing levels as they expect the rupee to remain stable," dealers said.

The six-month annualised premium closed at 8.67 per cent (8.6 per cent), three months at 8.42 per cent (8.2 per cent) and one month at 7.58 per cent (7.6 per cent). The September premium closed at 14/17 paise (15/17 paise), October at 44/47 paise (45/48 paise), November at 75/78 paise (76/79 paise), December at 109/111 paise (111/113 paise), January at 139/144 paise (141/145 paise), February at 169/174 paise (170/175 paise), March at 205/210 paise (206/211 paise), April at 241/247 paise (242/248 paise), May at 276/281 paise (277/282 paise), June at 315/321 paise (316/322 paise), July at 344/350 paise (346/353 paise) and August at 378/386 paise (380/386 paise).

FORWARD: The six-month annualised forward premium is seen at 8.65-8.70 per cent on Thursday.

Gilts

The government securities market on Wednesday continued to see active trades in the two new loans -- the 11.98 per cent 2004 and 12.25 per cent 2008 papers. Both the securities traded at par, sources said.

"Most primary dealers were seen offloading these two securities and a few private sector and nationalised banks were seen buying these papers," dealers said.

The market is selling new loans and other short-dated papers as short-term gilt prices are expected to fall, sources said. The market also witnessed selling interest in short-term gilts like the 11.55 per cent 2001 paper and papers maturing in 2001 to 2005.

FORECAST: Short-term gilt prices are expected to fall by 3-5 paise on Thursday.