The overnight interest rates ruled lower at the interbank call money market on Thursday. The rates opened easy at 8.75-9.00 per cent marginally lower than the previous closing range of 8.90-9 per cent. The rates further eased during the day and hovered in a narrow range of 8.50 - 8.75 per cent for most part of the day."There was nominal demand for funds from corporates which was matched by good supply ahead of reporting Friday" a dealer in a private bank said. The call rates eased further and finally closed at 8.00-8.25 per cent against the previous close of 8.90-9.00 per cent level. At the repo auction, the Reserve Bank of India has accepted two applications for rs 161.00 crore for 4-day 8.00 per cent fixed rate repos held here today. Today's outflow of Rs 161 crore is after two fixed rate repos which saw no response from banks.

Forecast: The call rates will easen considerably on Friday due to reporting Friday.

Gilts

The bond prices rallied after the call rates easedmarginally and the rupee staged a slight rally. "Trades were however dull", a dealer in a private bank said. The 91 day T-bills maturing on January 9,1999 was traded for Rs 20 crore at a weighted yield of 9.40 per cent. The 11.40 per cent government loan maturing in 2000 was traded for Rs 15 crore at a weighted yield of 11.35 per cent. The 11.90 per cent government loan maturing in 2007 was traded for Rs 10 crore at a weighted average of 12.21 per cent. A repo trade worth RS 25 crore was traded for a repo term of 14 days at a rate of 9.00 per cent. The total traded value at the National Stock Exchange was Rs 189.93 crore.

FORECAST:The debt market is likely to see thin trades on Friday. Spot Dollar

The rupee rallied by 3 paise against the dollar to close at 42.43/44 on Thursday. The Indian currency opened at 42.45/47, unchanged from its previous close, and traded in a narrow 3 paise band throughout the day. "The State Bank of India did not bid for the greenback. A few banks unwound theirlong-dollar positions with the rupee holding below 42.50. This helped the rupee post gains," a dealer with a British bank said. At the close, the rupee was seen at 42.43/44. Cash/tom quoted at 0.25/0.50 paise (0.50/1 paise) and cash/spot at 1.50/2 paise (0.25/0.50 paise). The Reserve Bank of India pegged its reference rate for the dollar at 42.47, 4 paise lower than its previous peg of 42.44.

FORECAST: The rupee is seen in the 42.44-42.48 band on Friday.

Forward Premiums

Forward premiums posted gains across the board with pressure easing off the spot rupee and relatively lower call rates at 8-8.25 per cent. The six-month annualised forward cover quoted at 7.68 per cent, lower than its previous closing levels. "There is a slight change in sentiment with the spot rupee holding under 42.50," dealers said. Small amount of receiving was also witnessed. March premiums closed at 103/108 paise (108/111 paise), April at 136/141 paise (141/144 paise) and May at 169/172 paise (174/177 paise) while inthe long forwards, June quoted at 202/205 paise (200/209 paise), July at 234/238 paise (239/242 paise) and August at 267/272 paise (272/275 paise).

FORECAST: The six-month annualised forward is seen at 7.64-7.77 per cent on Friday.