Call rates ruled easy on Wednesday. Overnight rates opened at 8.05-8.10 per cent compared with their previous close of 8.05 per cent. Lacklustre demand for funds is keeping call rates stable at 8-8.10 per cent. "There is comfortable liquidity in the system which is keeping call rates close to the repo level," dealers said. The total repo outstanding in the system is to the tune of Rs 3,500 crore. Rs 1,356 crore left the system for the Reserve Bank of India repos on Wednesday. The central bank received five applications and accepted all of them. There was no inflow into the system through the RBI repos. Call rates closed at 8 per cent. The rates are expected to rule easy at 8-8.50 per cent throughout the week owing to an inflow of around Rs 2,500 crore through treasury bill redemptions and coupon payments, dealers said.

FORECAST: Call rates are seen at 8-8.15 per cent on Thursday.

Spot Dollar

The spot rupee moved in a narrow 2 paise band on Wednesday owing to lacklustredemand for dollars. The Indian currency opened at 42.42/43 against the dollar, a tad weaker than its previous close of 42.41/42. The rupee ruled in a 42.41-42.43 band for most part of the day. The rupee strengthened by 1 paise to an intra-day high of 42.41/42 owing to some dollar-selling by corporates. "However in the afternoon, dollar supply was met by demand which saw the rupee weaken by 1 paise," dealers said. The rupee finally closed at its opening level of 42.42/43. "Players are not taking any positions in the market owing to the forthcoming elections which have created political uncertainty," dealers said. The Reserve Bank of India's reference rate for the dollar was pegged at Rs 42.42 on Wednesday (Rs 42.43).

FORECAST: The rupee is seen at 42.35-42.45 on Thursday.

Forward Premiums

Forward premiums opened 1-3 paise lower than their previous closing levels on Wednesday. Forwards softened further by 1-2 paise during the day owing to marginal receiving by exporters. The six-monthannualised premium closed at 7.5 per cent (7.5 per cent), three months at 6.03 per cent (5.9 per cent) and one month at 4.55 per cent (4.5 per cent). The November premium quoted at 0.5-0.75 paise (1-2 paise), December at 15-17 paise (16-18 paise), January at 38-41 paise (38-42 paise), February at 63-66 paise (65-69 paise), March at 95-100 paise (98-103 paise), April at 127-132 paise (130-135 paise), May at 156-160 paise (161-164 paise), June at 189-193 paise (194-198 paise), July at 222-227 paise (224-229 paise), August at 252-256 paise (254-259 paise), September at 282-287 paise (285-290 paise) and October at 313-318 paise (315-321 paise).

FORECAST: The six-month annualised cover is seen at 7.4-7.6 per cent on Thursday.

Gilts

Prices of short-dated government securities remained stable on Wednesday owing to subdued trading. "Trading was confined to short-term treasury bills and a few short-dated papers maturing between 1999 and 2000. Most players did not take new positions as they are notable to discern interest-rate movement," dealers said. Trades were confined to 91- and 364-day treasury bills. The 91-day treasury bill maturing on December 12, 1998, traded at 8.45-8.50 per cent and the 364-day treasury bill maturing on November 19, 1999, at 10.45 per cent. The 11.40 per cent 2000 paper traded at Rs 100.10. The wholesale debt market of the NSE witnessed trades worth Rs 252.59 crore compared with Rs 440.95 crore on Tuesday. The zero coupon government bond maturing in 2000 traded worth Rs 20 crore at a weighted yield of 10.88 peer cent. Grasim's commercial paper maturing on February 8, 1999, traded worth Rs 10 crore.

FORECAST: Gilt prices are seen stable on Thursday.