The overnight call money rates tightened on Wednesday as it opened at 8.60 per cent against the previous close of 8.30-8.50 per cent owing to high demand for funds coupled with limited supply in the system. According to money market dealers, call rates are expected to rule above the 8 per cent level throughout the week owing to marginally tight liquidity conditions prevailing in the system. The RBI on Wednesday did not receive any application for a three-day fixed rate repo in government of India dated securities for parties holding SGL and current account. Towards the day's close, the call rates eased to settle at 8.25 per cent, slightly lower compared with their previous close of 8.30-8.50 per cent.

"Most deals were struck between 8.25-8.40 per cent," dealers said. The National Stock Exchange's over night Mibid and Mibor were quoted at 8.41 per cent and 8.60 per cent.

FORECAST: Call rates seen between 8.25-8.65 per cent levels on Thursday.

Spot Dollar

The Indiancurrency recovered by two paise against the dollar at the interbank foreign exchange market on Wednesday owing to marginally high supply in the system. The rupee strengthened by four paise towards the opening as it opened at 42.79/81 against the dollar compared with the previous close of 42.82/85 against dollar. The rupee recorded an intra-day low of 42.83 against dollar compared with the previous low of 43 against dollar. During the day, owing to marginally higher demand, the rupee weakened by four paise to 42.82/83 against dollar compared with the previous close of 42.83/85. It finally closed at 42.83 against dollar. The cash spot quoted between Rs 2 to Rs 2.50. The RBI fixed the reference rate for US dollar at Rs 42.82 against the previous level of 42.95. In the cross currency trading, the rupee opened at 45.50 against euro, went to an intr-day low of 45.79 to finally settle at 45.61 against the euro.

FORECAST: The rupee is expected to rule between 42.79-85 against dollar.

ForwardPremiums

Forward premiums across the board softened by 3-8 paise owing to marginally high receiving by corporates. "At the existing level, importers are not interested to cover," said a dealer from a foreign bank. The premium opened at their pervious closing level.

However, during the day the premiums eased owing to high receiving pressure by exporters. The six month annualised closed at 6.10 per cent (6.5 per cent), three months at 5.32 per cent and one month at 5.32 per cent. In the near term, May premiums closed at 14-16 paise (19/20 paise), June at 35-37 paise (40/41 paise), July at 56-58 paise, August at 77-79 paise, September at 103-105 paise, October at 126-128 paise, November at 154-157 paise, December at 182-185 paise, January at 210-213 paise, February at 233-236 paise and March at 260-263 paise.

FORECAST: Six-month annualised forward premium seen at 6-6.15 per cent on Thursday.

GiltsThe medium and long term government securities prices improved by 3-5 paise during the dayowing to higher buying interest. However the short term gilts prices ruled stable on Thursday. "Currently the market is only interested in the medium and long term papers as the market is not expecting any short term issue in the near future," said money market dealers. The 11.40 per cent 2000 paper was quoted at Rs 100.92 (Rs 100.91), 11.55 per cent 2001 paper at Rs 101.27 (Rs 101.25), 11.64 per cent 2000 paper at Rs 100.09, 11.15 per cent 2002 paper at Rs 100.16 (Rs 100.12), 11.50 per cent 2004 paper at Rs 100.55 (Rs 100.50), 12.50 per cent 2004 paper at Rs 104.27 (Rs 104.23) and 11.98 per cent 2004 paper at Rs 102.37 (Rs 102.31).

FORECAST: Bond prices are expected to firm up on Thursday.