Call rates remained rangebound on Wednesday. Overnight rates opened at 9.25-9.50 per cent and ruled steady throughout the day to finally finish softer at 9.10-9.20 per cent.

"Most banks seem to have covered for their reserve requirements ahead of the holidays next week," a dealer from a foreign bank said. Inter-bank liquidity appeared to remain easy despite the Rs 4,462.40-crore response to the 12.50 per cent 10-year state loan on Monday.

"Fears of tighter call rates this week seem to have subsided," dealers said, pointing to the Rs 1,500 crore mopup by the Reserve Bank of India through three-day 8 per cent fixed-rate repos on Wednesday. Elsewhere, the National Stock Exchange's Mibid and Mibor were pegged at 9.18 per cent and 9.42 per cent respectively.

FORECAST: Call rates are seen in the 9.15-9.40 per cent band on Thursday.

Spot Dollar

The rupee held steady against the dollar in dull trades on Wednesday.

The Indian currency opened at 42.33/35, little changed from itsovernight close, and quoted in a fine 3-paise band throughout the day. Lacklustre corporate demand for dollars saw the rupee hover around 42.32/33 till mid-session and quote at an intra-day high of 41.31 soon thereafter.

"The State Bank was seen bidding for the dollar... The rupee would have gained to 42.30 and higher had the State Bank not evinced interest," a dealer with a brokerage said. The rupee finally closed at 42.31/32.

Cash/spot finished at 0.75/1 paise and cash/tom at 0.75/0.50 paise. Elsewhere, the Reserve Bank of India fixed its reference rate for the dollar at Rs 42.34 against the previous Rs 42.35.

FORECAST: The rupee is seen between 42.30 and 42.37 on Thursday.

Forward Premiums

Forward premiums across all maturities softened on Wednesday with little paying and quite a bit of receiving interest in a thin market. October premiums closed at 7/9 paise (9-11 paise), November at 28/31 paise (32-35 paise) and December at 53/56 paise (55-60 paise).

In the longer terms, March premiumsclosed at 145/150 paise (152-156 paise) and April at 179/183 paise (184-189 paise). The six-month annualised forward premium quoted at 8.15 per cent. "There appears to be a bit of receiving interest ahead of the Reserve Bank's busy-season credit policy... Corporates with forex loan exposures and importers seem to have covered their positions," a dealer with a brokerage said.

FORECAST: The six-month annualised premium is seen at 8.10-8.15 per cent on Thursday.

Gilts

The government securities market witnessed lacklustre trades on Wednesday. Interest was seen in the 11.40 per cent 2000 paper which traded at Rs 99.90 at par, the 12 per cent 1999 paper at Rs 100.55, the 11.55 per cent 2001 paper at Rs 99.70-99.75 and the zero-coupon 1999 paper at Rs 97.42. Stray quotes were also seen in the 11.98 per cent 2004 paper at Rs 99.50-99.85.

The National Stock Exchange's wholesale debt market saw trades worth Rs 129.94 crore, down from Tuesday's Rs 222.28 crore. Trades in the 12 per cent 1999 amounted toRs 35 crore at a weighted yield of 10.79 per cent.

ACC's commercial paper maturing on December 28 saw trades worth Rs 5 crore at a yield of 11.10 per cent.

FORECAST: Short-term gilts are seen softening on Thursday.