Call rates remained rangebound on Thursday. Tightening of liquidity owing to reduced lending by banks on substantial withdrawal of funds by corporates led to the thin movement, sources said.

Overnight rates opened at 9.50-9.55 per cent, compared with their previous close of 9.10-9.20 per cent. The rates hovered around the opening level for most part of the day and finally eased to close at 9.20-9.25 per cent.

According to sources, call rates are expected to remain tight for the rest of the week owing to a slight liquidity squeeze on account of the Rs 4,462.40-crore state loan outflow from the system. The total outstanding in repos has also come down to Rs 1,520 crore. There was no outflow on Thursday.

FORECAST: Call rates are seen at 9.15-9.50 per cent on Friday.

Spot Dollar

The rupee moved in a 6 paise band against the dollar on Thursday. The Indian currency opened at 42.30/31, compared with its previous close of 42.31/32. "The rupee remained stable in the morningowing to lack of demand," dealers said.

The rupee strengthened to its intra-day high of 42.26/27 owing to some dollar selling by banks on behalf of corporates. "The State Bank of India bought dollars when the rupee was holding at 42.26/27 in order to rein in its further strengthening," a dealer from a private bank said. The rupee finally eased to close at 42.30/31, unchanged from its opening levels.

FORECAST: The rupee is seen between 42.28 and 42.38 on Friday.

Forward Premiums

Near-term forward premiums softened by 1-3 paise and far-end ones by 3-5 paise on Thursday owing to receiving by exporters in a thin market. The six-month annualised premium quoted at 7.72 per cent, three months at 6.38 per cent and one month at 6.25 per cent.

October premiums closed at 4-7 paise (7/9 paise), November at 24-27 paise (28/31 paise), December at 47-51 paise (53/56 paise), January at 75-78 paise, February at 105-109 paise, March at 138-142 paise (145/150 paise), April at 170-175 paise (179/183paise), May at 204-208 paise, June at 237-241 paise, July at 269-274 paise, August at 30-306 paise and September at 335-338 paise.

FORECAST: The six-month annualised premium is seen at 7.7-7.8 per cent on Friday.

Gilts

The government securities market remained lacklustre on Thursday. According to dealers, little interest was seen in short-dated gilts. "Due to uncertain interest-rate movement, players are not taking positions which is keeping the gilts market stable at the existing level," dealers said.

The market saw keen trades only in the zero coupon 1999 paper, the zero coupon 2000 paper and the 91-day treasury bills maturing on January 9. The zero coupon 1999 paper quoted at Rs 97.42 and the 91-day treasury bills at 10.05 per cent.

The wholesale debt market of the NSE witnessed trades worth Rs 206.02 crore. The 91-day treasury bills maturing on January 9 traded worth Rs 44.13 crore at a weighted yield of 10.05 per cent. The 11.98 per cent government loan maturing in 2004 tradedworth Rs 30 crore at a weighted yield of 12.06 per cent.

FORECAST: Short-term gilts are expected to open unchanged from Thursday's closing levels on Friday.