Call rates dropped sharply on the reporting Friday. Overnight rates opened at 6.00-7.00 per cent compared with their previous close of 8.10-8.25 per cent. The rates hovered around 5.00-7.00 per cent throughout the day owing to better liquidity in the system and as Friday was the reporting day.

The rates finally closed at 5.00-6.00 per cent. A dealer from a private bank said most transactions were conducted at 6.00-7.00 per cent. The total turnover of the Security Trading Corporation of India was Rs 1,700 crore and the weighted average was 6.12 per cent. The NSE's Mibid and Mibor rates quoted at 6.15 and 7.35 per cent, respectively.

Forecast: Call rates are seen at 8-9 per cent on Monday.

Debt Market

The secondary market for government securities remained lacklustre on Friday. But persistent mild selling pressure pushed down prices further by 5-10 paise across all maturities. The wholesale debt market of the NSE witnessed trades worth Rs 362 crore.

Besides, repo deals tothe tune of Rs 145 crore were struck. Dealers said they were awaiting the Rs 3,000 crore two-year paper auction. The cut-off yield at Monday's auction of Government of India two-year bonds was likely to be between 11.30 per cent and 11.35 per cent, dealers said. The 11.64 per cent 2000 bond -- a similar maturity two-year bond -- was last dealt at 11.31 per cent on Friday. The 11.55 per cent 2001 was traded worth Rs 35 crore at 11.55 per cent.

FORECAST: Prices of short-term gilts are likely to fall on Monday.

Spot Dollar

The rupee held firm against the dollar in dull trading on Friday. The Indian currency opened at 42.52/55, unchanged from its previous close. Later, lacklustre corporate demand and good dollar inflows saw the rupee gain to an intra-day high of 42.48/49. "State Bank of India did not sell dollars, but a few foreign banks were seen doing so," a dealer with a brokerage said.

The rupee quoted at 42.49/50 towards the close. Cash/spot closed at 1.75/4 paise and cash/tom at 1.5/3 paise."Dollar supplies have improved with fresh purchases being made by foreign institutional investors on the bourses," Gautam Rasiklal Ashra of Kanji Pitamber & Co said. Elsewhere, the Reserve Bank of India pegged its reference rate for the dollar at 42.51 compared with its previous peg of 42.53.

FORECAST: The rupee is seen between 42.49 and 42.52 on Monday.

Forward Premiums

Forward premiums, across all maturities, fell on Friday with little paying interest and a fair amount of receiving by exporters. In the near terms, October premiums closed at 25/27 paise ( 27-30 paise), November at 50/53 paise (55-58 paise) and December at 77/80 paise (84-87 paise). In the far forwards, April ended at 199/204 paise (211-216 paise), May at 232/237 paise (245-250 paise) and June 265/270 paise (279-284 paise). "A firm spot rupee and lack of paying saw forwards premiums soften from their overnight closes," a dealer from a European bank said. The six-month annualised premium quoted at 7.9 per cent (8.35 per cent) atthe close of trades.

FORECAST: The six-month annualised forward cover seen at 7.80 per cent on Monday.