Call rates eased slightly on Wednesday owing to little demand for funds. Overnight rates opened at 8.90-9 per cent compared with their previous close of 9-9.15 per cent.

The rates moved in a narrow band of 8.90-9 per cent throughout the morning. However in the afternoon, the rates tightened marginally to finally close at 9.10 per cent.

According to dealers, call rates are expected to rule around 9 per cent unless some measures are announced in the forthcoming busy season credit policy.

"Call rates may soften in the next fortnight if the lacklustre demand for funds continues," a dealer from a private bank said. At present, the total outstanding in the Reserve Bank of India repose is Rs 3,000 crore.

There was no inflow or outflow from the system on Wednesday. The NSE's Mibid and Mibor quoted at 8.99 per cent and 9.12 per cent, respectively.

FORECAST: Call rates are seen in the 8.75-9.25 per cent band on Thursday.

Spot Dollar

The spot rupee remained steady againstthe dollar on Wednesday. The Indian currency moved in a narrow 4 paise band owing to lacklustre demand for dollars.

The rupee opened at 42.25/26, unchanged from its previous close, and moved in the 42.24-42.28 range throughout the day. The State Bank of India entered the market and quoted at 42.24/26. Marginal selling by SBI and other banks on behalf of corporates weakened the rupee by 1 paise to 42.27/28 towards the close.

"The forex market witnessed dull trading. Importers and corporates are not covering in the spot as they expect the spot rupee to remain stable throughout the week," dealers said.

Cash tom quoted at 0.25-0.50 paise and cash spot at 0.50-0.75 paise. The Reserve Bank of India reference rate for the dollar was Rs 42.27 against the previous peg of Rs 42.26.

FORECAST: The spot rupee is seen at 42.24/32 on Thursday.

Forward Premiums

Forward premiums softened by 1-3 paise on Wednesday owing to lack of paying interest. Near-end premiums softened by 1-2 paise and far-endones by 2-3 paise.

"Exporters are not interested in receiving as they expect the premiums to fall while importers are not covering as they feel that the current levels are high," a dealer from a foreign bank said.

The six-month annualised premium quoted at 7.10 per cent (7.10 per cent), three months at 6.5 per cent (6.5 per cent) and one month at 4.85 per cent (4.8 per cent). October premium quoted at 0.25-0.50 paise, November at 17-19 paise (17-19 paise), December at 39-42 paise (40-42 paise), January at 67-71 paise (65-68 paise), February at 94-97 paise (93-96 paise), March at 122-127 paise (120-125 paise), April at 151-154 paise (149-152 paise), May at 181-185 paise (179-184 paise), June at 211-216 paise (209-213 paise), July at 250-255 paise (248-253 paise), August at 294-298 paise (292-295 paise) and September at 323-327 paise (321-325 paise).

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

Gilts

Prices of short-term government securities movedup by 2-3 paise on Wednesday on buying interest. "The market witnessed marginal buying interest in short-dated gilts," dealers said.

"Sentiment in the gilt market has improved as it expects some positive measures in the forthcoming credit policy," dealers said. The zero coupon 1999 paper quoted at Rs 97.80 (Rs 97.77), the 11.40 per cent 2000 paper at Rs 99.99, the 11.64 per cent 2000 paper at Rs 100.39-40 and the zero coupon 2000 paper at Rs 86.69 (Rs 86.67).

The wholesale debt market of the NSE witnessed trades worth Rs 202.51 crore compared with the previous peg of Rs 336.13 crore. The zero coupon government bond maturing in 1999 actively traded worth Rs 50 crore at a weighted yield of 10.20 per cent. Commercial paper of BPL maturing on December 28, 1998, traded worth Rs 5 crore at a yield of 11.04 per cent.

FORECAST: Short-term gilt prices are expected to improve by 1-2 paise on Thursday.