Call rates opened at 8.05-8.10 per cent on Tuesday, unchanged from their previous close. Overnight rates hovered between 8.05 per cent and 8.10 per cent throughout the day owing to lacklustre demand for funds. "Call rates are expected to remain easy between 8 per cent and 8.25 per cent during the week as the system is flush with liquidity," a dealer from a private bank said. The rates finally eased to close at 8 per cent. The total outstanding in repos is around Rs 3,000 crore. The total inflow into the system through repos was Rs 2,075 crore while the outflow was Rs 1,027 crore.

According to dealers, call rates are expected to rule around the repo level during the fortnight. "We do not anticipate any volatility in call rates in the near future," a dealer said. The NSE's Mibid and Mibor quoted at 7.99 per cent and 8.10 per cent respectively.

FORECAST: Call rates are seen at 8-8.25 per cent on Wednesday.

Spot Dollar

The forex market was volatile on Tuesday. The Indian currencyopened at 42.34/35 against the dollar compared with its previous close of 42.37/39. The rupee strengthened to 42.32/33 in the morning owing to dollar selling by foreign and private banks.

However in the afternoon, the rupee weakened to 42.35/37 owing to buying interest from a few corporates. State Bank of India entered the market and bought dollars when the rupee quoted at 42.35/37, which saw the rupee weaken to 42.39/41. The rupee closed at this level. "The rupee is not expected to depreciate much during the week," forex dealers said.

FORECAST: The rupee is seen between 42.30 and 42.45 on Wednesday.

Forwards Premium

Forward premiums opened at their previous closes on Tuesday. However, after the rupee weakened to 42.39/41 against the dollar, near-term premiums strengthened by 2-3 paise. Far-end ones strengthened by 6-9 paise towards the close. The six-month annualised premium quoted at 8 per cent (7.73 per cent), three months at 7.25 per cent (6.84 per cent) and one month at 7.04 per cent (7.05per cent).

The October premium quoted at 15-17 paise (14-16 paise), November at 41-43 paise (39-42 paise), December at 64-69 paise (62-66 paise), January at 96-100 paise (92-96 paise), February at 129-132 paise (122-127 paise), March at 162-167 paise (153-158 paise), April at 194-199 paise (185-190 paise), May at 226-231 paise (218-224 paise), June at 261-266 paise (252-258 paise), July at 294-299 paise (285-290 paise) and August at 326-331 paise (319-324 paise).

FORECAST: The six-month annualised premium is seen at 7.75-7.90 per cent on Wednesday.

Gilts

The government securities market remained subdued on Tuesday. Short-term gilt prices registered a 2-3 paise fall. "Trading was confined to a few short-dated gilts," a dealer from a private bank said. Buying interest was seen in the 11.40 per cent new loan maturing in 2000.

The 11.40 per cent 2000 paper quoted at Rs 99.96-Rs 100, the 11.55 per cent 2001 paper at Rs 99.77 (Rs 99.80) and the zero coupon 1999 paper at Rs 97.07 (Rs 97.12). "Debtmarket players are not actively trading in gilts as they are not able to take a view on the interest rate movement," dealers said. The wholesale debt market of the NSE witnessed trades worth Rs 224.78 crore (Rs 268.20 crore). The zero coupon bond maturing in 1999 traded worth Rs 33 crore at a weighted yield of 10.50 per cent.

FORECAST: Prices of short-term gilts are expected to fall by 2-3 paise on Wednesday.