The call money market remained subdued on Wednesday. Call rates opened at 9.10-9.12 per cent, a tad higher than their previous close of 9.10 per cent. Throughout the day, overnight rates ruled above the repo level. The rates moved up slightly in the afternoon owing to marginal demand and finally closed at 9.10-9.15 per cent.

According to sources, call rates are expected to rule tight during the fortnight owing to lack of funds in the system. "Advance tax outflow from the system and tight liquidity conditions have led to shortage of funds to park in repos," a dealer said. The central bank did not receive any application for its fixed-rate repos owing to tight liquidity conditions. At present, the total outstanding in the Reserve Bank of India repos is Rs 50 crore.

FORECAST: Call rates are seen at 9-9.20 per cent on Thursday.

Spot Dollar

The spot rupee moved in a narrow 2 paise range on Wednesday owing to subdued trading in the forex market. The Indian currency strengthened by1 paise to 42.54/55 at the opening compared with its previous close of 42.53/54. Throughout the day, the Indian currency ruled at the opening level owing to lack of demand by corporates and banks.

The spot rupee closed at 42.53/54, 1 paise weaker than its opening level. "The spot rupee is expected to remain stable at the existing levels unless some month-end demand is generated," dealers said. Dealers do not expect any fresh dollar supply into the system during the week. The Reserve Bank of India's reference rate for the dollar was Rs 42.55 (Rs 42.53).

FORECAST: The spot rupe is seen at 42.50-42.60 on Thursday.

Forwards Premiums

Forward premiums softened by 2-3 paise on Wednesday owing to marginal receiving by exporters. According to dealers, importers are not willing to pay. However marginal receiving by exporters and a stable spot rupee are keeping the premiums easy, they added.

The six-month annualised premium quoted at 7.5 per cent, three months at 6.5 per cent and one month at 5.6 percent. The December premium closed at 1-2 paise (2-3 paise), January 18-20 paise (19-20 paise), February 39-40 paise (40-42 paise), March 67-69 paise (68-70 paise), April 98-100 paise (98-100 paise), May 126-128 paise (128-130 paise), June 156-158 paise (156-158 paise), July 187-190 paise (188-190 paise), August 221-224 paise (222-224 paise), September 254-257 paise (254-258 paise), October 286-289 paise (287-290 paise) and November 323-326 paise (324-326 paise).

FORECAST: The six-month annualised premium is seen at 7.3-7.8 per cent on Thursday.

Gilts

Trading in the government securities market remained subdued on Wednesday owing to tight money market conditions. Short-term gilt prices remained stable at their previous closing levels. "Tight liquidity conditions are keeping banks away from taking new positions in the gilt market," a dealer said.

The 11.40 per cent paper maturing in 2000 traded at Rs 100.08 (Rs 100.08-100.09) and the 11.55 per cent paper maturing in 2001 at Rs 100.09 (Rs 100.10).The wholesale debt market of the NSE witnessed trades worth Rs 172.14 crore compared with Rs 253.89 crore at its previous close. The 11.40 per cent government loan maturing in 2000 traded worth Rs 24 crore at a weighted yield of 11.33 per cent. The 91-day treasury bill maturing on March 20, 1999, traded worth Rs 20 crore at a yield of 9.59 per cent. Non-SLR bonds of IDBI maturing in 2005 traded worth Rs 30 crore at a yield of 13.94 per cent.

FORECAST: Gilt prices are seen subdued on Thursday.