The overnight call money rates opened 15 basis points higher at 8.90 per cent on Wednesday against its previous close of 8.75 per cent owing to marginal demand for funds. Throughout the day, the overnight rates ruled in a narrow range of 8.75-8.90 per cent. "Most deals were struck between 8.85-8.90 per cent," said a dealer. The rates finally eased by 15 basis points to settle at 8.75 per cent towards the close, unchanged from their previous closing levels. Call rates are expected to rule between 8.75-9.25 per cent throughout the week owing to tight liquidty conditions. The RBI on Wednesday mopped up a substantial Rs 1,500 crore through its three-day fixed rate repo in government of India dated securities at 8 per cent. However, the central bank received only one repo application which clearly states that liquidity is confined only in the hands of few banks. About 3,000 crore is expeected to come into the system on January 18 through redemption of zero coupon 1999 paper which is expected toease the call rates.

FORECAST: Call rates are expected to rule between 8.50-9.25 per cent on Thursday.

Spot Dollar

The rupee remained stable on Wednesday. Throughout the day, the Indian currency moved in a narrow 4 paise band against the dollar owing to lacklustre trading. The rupee strengthened by one paise towards the opening at 42.51/52 against dollar compared with their previous close of 42.52/53. Throughout the morning, the rupee ruled at 42.51/53 against the dollar. However, at noon owing to marginal buying by importers, the Indian currency weakened by one paise to finally close at 42.50/51 against the dollar. The RBI's reference rate for US dollar was Rs 42.51 as against the previous peg of Rs 42.56. Meanwhile, rupee opened strengthened marginally against the euro as it opened at 49.93 against the euro (50.26/28), quoted at an intra day low of 50.32 against the european currency to finally close at 49.87 against euro. The Indian rupee is expected to open between 49.90-50.30 againsteuro on Thursday.

FORECAST: Indian currency seen between 42.50-42.55 against dollar on Thursday.

Forward Premiums:

Near-end forward premium softened by 1-5 paise while far-end premium eased by 8-12 paise on Wednesday owing to high receiving by exporters. "Exporters are receiving in the forwards as they are finding the existing rates quite attractive to receive.

"Importers are not interested to pay at the existing low levels," said a forex dealer.

The six month annualised closed at 6.66 per cent (7 per cent), three months at 5.17 per cent (5.55 per cent) and one month at 4.23 per cent (4.50 per cent). January premium closed at 8-9 paise (10-12 paise), February closed at 23-24 paise (28-30 paise), March at 44-46 paise (51-54 paise), April at 72-74 paise (80-84 paise), May at 99-101 paise (111-114 paise), June at 126-129 paise (140-143 paise), July at 157-159 paise (172-175 paise), August at 187-191 paise (203-206 paise), September at 217-221 paise (234-238 paise), October at 247-252paise, November at 277-282 paise, and December at 307-311 paise.

FORECAST: Six-month annualised premium seen at 6.5-7 per cent on Thursday.

Gilts

Prices of government securities further improved by 3-4 paise on Wednesday owing to improved market sentiment. "The market is of the view that interest rates of short and medium-term papers will fall and hence the increase in price," said a dealer. According to market dealers, a lot of buying interest was witnessed in short and medium term gilts. The 11.40 per cent 2000 paper was traded at Rs 100.13-Rs 100.15, 11.55 per cent 2001 paper at Rs 100.13-Rs 100.15, zero coupon 2000 paper maturing on July 27 at Rs 84.39 (Rs 84.35), zero coupon 2000 paper maturing on February 3 at Rs 89.63, 11.75 per cent 2001 paper at Rs 100.55, 12.50 per cent 2004 paper at Rs 102.10 paise, and 12.69 per cent 2002 paper at Rs 101.91. According to money market dealers, the gilts prices are expcted to move up marginally during the week.

FORECAST:Gilts pricesare expected to improve by 1-2 paise on Thursday.