The spot rupee moved in a narrow 2 paise band throughout the day owing to dull trading in the spot market. The Indian currency opened at 42.28/29 against the dollar, unchanged from its previous close. "Dull trading in the spot rupee saw the Indian currency hovering between 42.27/29 against the dollar throughout the day," forex dealers said.

Lacklustre demand for dollar and sufficient supply is keeping the spot rupee stable, said forex dealers.

"The market is not taking any view on the rupee movement and expect the Indian currency to move in a band of 42.25-35 for atleast a fortnight," dealers said. The spot rupee weakened by one paise towards the close to 42.27/28 against dollar. State Bank of India was not actively trading in the market on Wednesday. The RBI reference rate for US dollar was fixed at Rs 42.28, one paise higher than the previous peg of 42.29.

FORECAST: The rupee is seen in a band of 42.26/37 on Thursday.

Forwards Premiums

The forward premium acrossall maturities moved in a narrow band of 1-3 paise on Wednesday. The near-end forward premium softened by 1 paise and far-end fell by 1-3 paise compared with their previous close. The six month annualised premium closed at 7.1 per cent, three-months at 5.9 per cent, and one-month at 4.9 per cent. The November premium was quoted at 6-8 paise (6-8 paise), December at 23-25 paise (24-27 paise), January at 49-52 paise (50-53 paise), February at 75-77 paise (76-79 paise), March at 106-109 paise (108-110 paise), April at 136-139 paise (137-140 paise), May at 164-168 paise (164-169 paise), June at 192-197 paise (193-198 paise), July at 225-229 paise (226-230 paise), August at 253-258 paise (254-259 paise) and September at 285-290 paise (286-291 paise).

FORECAST: The six-month annualised premium is seen between 7-7.4 per cent on Thursday.

Call Money

Call money rates ruled easy and hovered close to the repo level of 8 per cent on Wednesday owing to comfortable liquidity conditions in the system.The overnight call rate opened at 8.05-8.10 per cent against the previous close of 8 per cent. The rates moved in a narrow range of 8.05-8.15 per cent throughout the day to finally close at the day's opening levels. Money market dealers said that call rates are expected to move around the repo level due to comfortable liquidity in the system. However, in the event of the United States ordering military air strikes on Iraq, dealers expect call rates to tighten since the rupee could quite likely depreciate against the dollar. The NSE's overnight Mibid and Mibor were quoted at 8.04 per cent and 8.13 per cent respectively whereas the 14-day Mibid and Mibor were quoted at 8.40 per cent and 8.98 per cent respectively.

FORECAST: Overnight call rates are expected to move in a band of 8-8.15 per cent on Thursday.

GILTS

Trades in the wholesale debt market segment of the National Stock Exchange were subdued on Wednesday with activities confined mostly to short-dated bonds. "The market remainedquiet throughout the day. The debt market is glutted with securities and there seems to be no buying interest," said a dealer at a private bank. The 11.40 per cent 2000 government loan was traded for Rs 65 crore at a weighted yield of 11.35 per cent while the zero coupon 1999 government bond was traded for Rs 40 crore at a weighted yield of 9.67 per cent. The total traded value in the WDM segment of the NSE stood at Rs 556.36 crore. Commercial paper of L&T Ltd maturing on February 1, 1999, was traded for Rs 10 crore at a weighted yield of 10.58 per cent. Two repo trades totalling Rs 20 crore were transacted at a repo rate of 8.70 per cent and 8.75 per cent for 14 days.

FORECAST: Securities market expected to remain dull on Thursday.