Call money rates moved in a narrow band of 8-8.05 per cent on Friday. The call rates opened at 8.05 per cent, unchanged from their previous close and remained stable at this level throughout the day owing to lacklustre demand for funds. "Marginal demand was seen in the morning. However, at noon the rates eased by 5 basis points to repo levels due to negligible demand for funds," money market dealers said. The rates finally closed at the repo level. According to dealers, there was comfortable liquidity in the system as the total outstanding in repo was around Rs 3,600 crore. The total fund inflow into the system was to the tune of Rs 8 crore whereas the outflow from the system through RBI repo was Rs 40 crore. The central bank received only one application and accepted it. On Saturday about Rs 1,100 crore is expected to come into the system by way of 14-day T-bills redemption and interest payment of a 11.5 per cent 2009 paper and other securities.

FORECAST:Call rates are expectedto stay at 8 per cent level on Saturday.

Spot Dollar

The spot rupee strengthened by 2 paise to an intra-day high of 42.30/31 against the dollar on Friday, compared to its previous close of 42.32/33. The Indian currency opened at 42.32/33 against the dollar, unchanged from its previous close. After opening at 42.32/33 against the dollar, it weakened by one paise to 42.33/34 due to some corporate demand in the morning. However, at noon the Indian currency strengthened by 3 paise to 42.30/31 against dollar due to some dollar supply. It finally closed at these levels. According to forex dealers, the rupee is expected to remain stable in a band of 42.25-42.35 against the dollar in the forthcoming week due to lacklustre demand for dollars in the market. "The marginal demand for dollars is met by the existing supply in the system. The RBI reference rate for US dollar was fixed at Rs 42.32 against the previous peg of Rs 42.33.

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

Forward Premiums

The forward premiums across all maturities fell by 1-5 paise on Friday. The near-end premiums softened by 1-2 paise whereas the far-end fell by 3-5 paise. "There was marginal receiving by exporters," dealers said. The six-month annualised premium closed at 7.2 per cent, three-months at 5.75 per cent and one-month at 4.53 per cent. The November premium was quoted at 5--8 paise (6-9 paise), December at 19-24 paise (23-27 paise), January at 44-47 paise (49-53 paise), February at 71-74 paise (75-78 paise), March at 101-105 paise (106-111 paise), April at 132-135 paise (137-142 paise), May at 165-169 paise (167-172 paise), June at 190-195 paise (193-199 paise), July at 224-229 paise (227-232 paise), August at 253-258 paise (257-263 paise) and September at 283-288 paise (287-293 paise).

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

GILTS

Sentiments in the gilts market improved further on Friday with short-term giltsprices moving upwards by 1-2 paise. "Marginal selling interest is seen in short-dated gilts," said dealers. According to dealers, most traded securities were zero coupon 1999 paper, zero coupon 2000 paper, 11.64 per cent 2000 paper and 11.55 per cent 2001 paper. Zero coupon 1999 paper was traded at Rs 99.35, 11.40 per cent 2000 paper at Rs 100.09 and 11.55 per cent 2001 paper at Rs 100.12. The wholesale debt market of NSE witnessed trades worth Rs 397.30 crore. The 11.40 per cent government loan maturing in 2000 was traded worth Rs 88 crore at a yield of 11.95 per cent. The zero coupon government bond maturing in February 1999 was traded worth Rs 30 crore at a weighted yield of 9.36 per cent.

FORECAST: Short-term gilts prices are expected to remain stable on Saturday.