Call rates remained rangebound on Friday owing to lacklustre demand for funds. Overnight rates opened at 8 per cent, unchanged from their previous close. The rates remained stable at 8 per cent for most part of the day and finally closed higher at 8.10 per cent owing to marginal demand on account of a few high-value cheques' clearance. "Excess liquidity in the system coupled with lack of attractive avenues to park funds is keeping call rates stable," dealers said. There was no outflow from the system through three-day fixed-rate repos on Friday as most players actively bought dollars from the forex market with their surplus funds. The total inflow into the system through repo reversal was Rs 357 crore. "The rates are likely to rule easy during the fortnight as no immediate outflows are expected," a dealer from a private bank said.

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

Spot Dollar

The spot rupee continued on its downward journey on Friday. TheIndian currency weakened to an intra-day low of 42.56/57 against the dollar owing to incessant demand for dollars from corporates. The rupee opened at 42.51/52, unchanged from its previous close. "The uncertain political scenario in the country has spurred demand for dollars," a dealer said. In the morning, the rupee weakened by 2 paise owing to corporate demand for dollars. "Slack dollar supply and active buying by the State Bank of India at these levels further weakened the rupee by 3 paise," a dealer said. The rupee closed at an intra-day low of 42.56/57 compared with its previous close of 42.51/52. The RBI reference rate for US dollar was Rs 42.52 as against the previous peg of 42.48.

FORECAST: The rupee is seen between 42.45 and 42.60 on Monday.

Forward Premiums

A falling rupee saw forward premiums firm up marginally by 2 paise at the start of trades on Friday. However, lack of payers resulted in softening of premiums by 1 paise. The six-month annualised forward cover closed at 7.8per cent (7.85 per cent), three months at 6.59 per cent (6.59 per cent) and one month at 5.35 per cent (5.35 per cent). The December premium closed at 19-20 paise (17-20 paise), January at 42-46 paise (39-44 paise), February at 65-70 paise (63-66 paise), March at 99-103 paise (97-102 paise), April at 132-136 paise (130-135 paise), May at 163-167 paise (161-166 paise), June at 196-201 paise (195-200 paise), July at 230-235 paise (229-233 paise) and August at 262-267 paise (260-265 paise).

FORECAST: The six-month annualised cover is seen at 7.5-7.9 per cent on Monday.

Gilts

Prices of short-term government securities crashed by 5-8 paise on Friday owing to panic selling by a few foreign and private banks in response to the rupee's fall. "Most foreign and private banks were seen offloading short-dated papers maturing between 1999 and 2001," dealers said. The 11.40 per cent 2000 paper traded at Rs 100.04 (Rs 100.12), the 11.64 per cent 2000 paper at Rs 100.44 (Rs 100.49) and the 11.55 per cent2001 paper at Rs 100.04 (Rs 100.05). "There was no buying interest in either treasury bills or short-term papers," dealers said. The wholesale debt market of the NSE witnessed trades worth Rs 208.21 crore compared with Rs 237.37 crore on Thursday. The commercial paper of ACC and Pidilite Industries maturing on February 9, 1999, and February 3, 1999, traded worth Rs 5 crore each at a yield of 10.50 per cent.

FORECAST: Gilt prices are expected to stabilise on Saturday.