Call rates remained stable at around 8 per cent on Tuesday. Overnight rates opened at 8 per cent, a shade lower than their previous close of 8-8.10 per cent. The rates moved in the narrow range of 7.90-8 per cent throughout the day and finally closed at the opening level of 8 per cent. "Most banks are not borrowing at the repo rate as they expect the interest rates to soften during the week," said a dealer from a foreign bank. The system is flush with liquidity as Rs 6,000 crore is locked in fixed-rate repos. Inflow into the system through fixed-rate repos was Rs 75 crore and outflow through repo reversal was Rs 2,001 crore. Interest rates are likely to ease further during the week as the second tranche of resurgent bond proceeds is expected to enter the system. The NSE's Mibid and Mibor quoted at 5.24 per cent.

FORECAST: Call rates are seen at 7.50-8 per cent on Wednesday.

Debt:

The government securities market remained stable on Tuesday. "Trades were dull," dealerssaid. Prices of short-dated securities appreciated by 1-2 paise. "There are few trades in the government securities market as market players are waiting for the two-year paper auction on September 28, which will decide the movement of short-term yields," dealers said. The 11.64 per cent 2000 paper quoted at Rs 100.60 (Rs 100.61), the 11.55 per cent 2001 paper at Rs 99.99-100.01 (Rs 100.01), the 12 per cent 1999 paper at Rs 100.76 (Rs 100.77), the zero coupon 1999 paper at Rs 96.80 (Rs 96.80).

The wholesale debt market of the NSE witnessed trades worth Rs 300.72 crore. The 12.30 per cent government loan maturing in 1998 traded worth Rs 40 crore at a weighted yield of 10.45 per cent.

FORECAST: Short-dated gilt prices are expected to remain at Tuesday's levels on Wednesday.

Spot Rupee:

The rupee moved in a narrow range against the dollar on Tuesday -- between 42.49 and 42.51. The Indian currency opened at 42.49/51, unchanged from its previous close. Later, the rupee weakened to anintra-day low of 42.52 due to little dollar-demand from importers, and appreciated by 2 paise towards the close to 42.49/50. "Market was dull as the rupee held steady," a dealer from a foreign bank said. State Bank of India quoted at 42.40/51. "SBI reportedly sold and bought. However, it cannot be confirmed," said a dealer from a private bank. According to forex dealers, the rupee is expected to remain steady during the week. "The rupee is not expected to depreciate during the week," dealers said. The RBI's reference rate for dollar was Rs 42.51 (Rs 42.52).

FORECAST: The spot rupee is seen at 42.48/55 on Wednesday.

Forward Rupee:

Forward premiums remained stable on Tuesday. Near-end premiums remained unchanged from their previous close. However, far-end ones rose by 2-3 paise as a few importers were seen covering themselves. The six-month annualised premium quoted at 7.8 per cent, three months at 7.10 per cent and one month at 7.05 per cent. September premium quoted at 2-3 paise, Octoberat 27-29 paise, November at 52-54 paise, December at 80-83 paise, January at 105-110 paise, February at 139-142 paise, March at 170-173 paise, April at 203-206 paise, May at 237-240 paise, June at 272-276 paise and July at 306-309 paise.

FORECAST: The six-month annualised forward cover is seen at 7.5-8 per cent on Wednesday.