Call rates opened at 9.40-9.50 per cent on Tuesday compared with their previous close of 8.25-8.50 per cent. "A few deals were also done at 9.75 per cent," a dealer from a private bank said. Overnight rates tightened to around 9.50 per cent owing to absence of traditional lenders. According to dealers, big institutional lenders were not actively lending in the call market as most of them subscribed to the 10-year state government loan offering a coupon of 12.50 per cent. The rates finally eased in the afternoon owing to lowered demand to finally settle at 8.75-9 per cent towards the close. "Call rates are expected to remain high during this week due to tightening of liquidity," dealers said. The total repo outstanding in the system has come down to Rs 2,631 crore from Rs 5,000 crore. The Reserve Bank of India mopped up Rs 28 crore through three-day 8 per cent fixed-rate repos.

FORECAST: Call rates are seen at 8.5-9.5 per cent on Wednesday.

Spot Rupee

The rupee remainedrangebound in a thin market on Tuesday. The Indian currency moved in a 6 paise band throughout the day. The rupee opened at 42.31/33 against the dollar, compared with its previous close of 42.29/31. However later the rupee weakened to 42.35/37 owing to dollar buying by banks. "Banks showed buying interest when the rupee was ruling at 42.31/33," dealers said. The rupee strengthened a little to 42.34/35 towards the close owing to some dollar selling by exporters. "The rupee is expected to remain stable at the existing levels throughout the week owing to lacklustre demand and sufficient supply to meet the little demand," a dealer from a foreign bank said. The Reserve Bank of India fixed the reference rate for the dollar 1 paise lower at 42.35 against the previous fix of 42.36.

FORECAST: The rupee is seen between 42.30 and 42.40 on Wednesday.

Forwards premiums

Forward premiums across all maturities opened higher on Tuesday compared with their previous close owing to paying interest by bankswhen call rates were ruling at 9.50 per cent. However premiums fell later in the day owing to some receiving by exporters. March premium, which opened at 60-63 paise, closed at 52-54 paise. The six-month annualised premium quoted at 8 per cent, three months at 7.15 per cent and one month at 6.4 per cent. The October premium closed at 9-11 paise (10-11 paise), November at 32-35 paise (34-35 paise), December at 55-60 paise (58-60 paise), January at 86-89 paise (88-90 paise), February at 117-121 paise (120-123 paise), March at 152-156 paise (155-157 paise) and April at 184-189 paise (187-190 paise).

FORECAST: The six-month annualised premium is seen at 8-8.5 per cent on Wednesday.

Gilts

The government securities market remained stable on Tuesday owing to lowered trading by banks and institutions as most of them subscribed to the 10-year state government loan. "Trades were confined to only a few short-term bonds," dealers said. The 12 per cent 1999 paper traded at Rs 100.51 and the zero coupon1999 paper at Rs 97.40 (Rs 97.35). The wholesale debt market of the NSE witnessed trades worth Rs 222.28 crore (Rs 167.04 crore). The 91-day treasury bill maturing on January 9, 1999, actively traded worth Rs 47.37 crore at a weighted yield of 9.99 per cent. The zero coupon government bond maturing in 2000 traded worth Rs 35 crore at a weighted yield of 11.27 per cent. Commercial papers of IPCL maturing on January 13, 1999, traded worth Rs 5 crore at a yield of 11.25 per cent.

FORECAST: Prices of short-term gilts are expected to remain unchanged from their previous closes on Wednesday.