Call rates moved in a narrow 9-9.15 per cent band on Tuesday. Overnight rates opened at 9.15 per cent compared with their previous close of 9-9.10 per cent. Call rates remained range bound owing to lack of demand for funds, and closed at the opening levels. "The market witnessed dull trading,'' a dealer said. According to dealers, banks are comfortably liquid and not borrowing above 9 per cent. "Most primary dealers are locking their funds in the Reserve Bank of India repose as they expect short-term interest rates to soften," dealers said. At present, the total outstanding in repose is Rs 3,000 crore which will come into the system on October 29. There was no inflow or outflow from the system on Tuesday. The NSE's Mibid and Mibor quoted at 9.01 per cent and 9.17 pr cent, repetitively.

FORECAST: Call rates are seen in the 9-9.25 per cent band on Wednesday.

Spot Dollar

The spot rupee moved in a thin 3 paise band against the dollar on Tuesday. The Indian currency openedat 42.26/27 and remained at these levels throughout the day owing to lackluster demand for dollars matched by sufficient supply. ``The forex market witnessed dull trading,'' a forex dealer said. The State Bank of India did not trade aggressively. "There is little demand for dollars. Since the last two days, SBI is also not supporting the rupee from appreciating. Thus the rupee is ruling at 42.25/42.30 levels," a forex dealer from a private bank said. The RBI's reference rate for the dollar was Rs 42.26 compared with the previous peg of Rs 42.27.

The spot rupee is expected to rule between 42.24 and 42.38 this week.

FORECAST: The spot rupee is seen at 42.24/36 on Wednesday.

Forward Premiums

Forward premiums softened on Tuesday owing to lack of paying pressure by importers and marginal receiving by exporters. Near-term premiums fell by 3-4 paise and far-end ones by 8-10 paise. "Importers are not covering at the existing levels as premiums are on the higher side. Besides, the market expectsinterest rates to soften," a dealer said. The six-month annualised premium quoted at 7.10 per cent (7.7 per cent), three months at 6.5 per cent (7 per cent) and one month at 4.85 per cent (5.7 per cent). October premium quoted at 0.25-0.50 paise (1-3 paise), November at 17-19 paise (20-22 paise), December at 40-42 paise (44-46 paise), January at 65-68 paise (73-75 paise), February at 93-96 paise (101-103 paise), March at 120-127 paise (130-133 paise), April at 149-152 paise (161-164 paise), May at 179-184 paise (196-199 paise), June at 209-213 paise (227-232 paise) July at 248-253 paise (263-267 paise), August at 292-295 paise (303-307 paise) and September at 321-325 paise (334-338).

FORECAST: The six-month annualised premium is seen at 7-7.15 per cent on Wednesday.

Gilts

Prices of short-term government securities moved up by 3-5 paise on Tuesday. "The market witnessed marginal buying interest in short-dated gilts," dealers said. "Sentiment in the gilt market has improved as it expectssome positive measures in the forthcoming credit policy," dealers said. The zero coupon 1999 paper quoted at Rs 97.77 (Rs 97.72-Rs 97.75), the 11.40 per cent 2000 paper at Rs 99.99 (Rs 99.97), the 11.64 per cent 2000 paper at Rs 100.39-40 (Rs 100.35) and the zero coupon 2000 paper at Rs 82.60. The wholesale debt market of the NSE witnessed trades worth Rs 336.13 crore compared with the previous peg of Rs 302.49 crore. The zero coupon government bond maturing in 2000 traded worth Rs 55 crore at a weighted yield of 11.24 per cent. Commercial paper of Telco maturing on January 18 1999 traded worth Rs 10 crore at a yield of 11.22 per cent.

FORECAST: Short-term gilt prices are expected to remain stable on Wednesday.