Overnight rates ruled steady in quite trades today. Opening the day unchanged from its last close at 7.90-8 per cent levels, call rates ruled in the same band throughout the day. "It is the early part of the fortnight, and demand for funds is on the lower side...demand for funds was met by adequate supply. This, kept call rates in a narrow range", dealers said. Most of the deals were struck at around 7.97 per cent thereabouts. The Reserve Bank did not receive any response to its three-day six per cent fixed rate repos held today. The National Stock Exchange's overnight Mibid and Mibor quoted at 7.93 per cent (7.99 per cent) and 8.05 per cent (8.12 per cent) with the 14-day ones at 8.24 per cent (8.25 per cent) and 8.92 per cent (8.90 per cent). Elsewhere, the Reserve Bank announced the auctions of 14-day and 91-day T-bills for a notified amount of Rs 100 crore each on June 11.

FORECAST: Call rates seen at 7.85-8.10 per cent levels on Wednesday.

Spot dollar

The rupeewent lower against the dollar on Tuesday to finish at 43.03/04. Opening the day at 42.98/99 from its last close at 42.97/98, the rupee touched an intra-day low of 43.04/04 on fairly active inter-bank interest for dollars. A few local corporates and the State Bank of India were seen bidding for dollars in early trades. "The strong statement by Reserve Bank of India's deputy governor, Jagdish Capoor, that the central bank will allow the rupee to find its own levels, and will intervene to bring it back to below 43 levels on crossing this threshold puulled the rupee down", Mecklai Financial Services senior vice-president, KN Dey, said. News of Pakistani foreign minister, Sartaj Aziz's visit to India on June 12 helped the rupee recover to 42.9850/9950 by noon. However, a fresh bout of short covering by banks put pressure on the rupee pullimg it down to 43.03/04 by close of trades. Cash/spot quoted at 0.75/1 paise (1.75/1 paise) with both cash/tom and tom/spot going at 0.25/0.50 paise. The Reserve Bank of Indiapegged its reference rate for the dollar at 42.98 as against its previous fix at 43.01. Meanwhile, the rupee opened at 44.19 (44.46) against the euro, went to an intra-day low of 44.73 (44.49) to finally close at 44.90 (44.25).

FORECAST: Rupee seen at 43/43.10 levels on Wednesday.

Forward premiums

Forward premiums drifted further lower on Tuesday despite a weaker spot rupee. Near forwards eased by 1 to 2 paise while far forwards ended by 3 to 4 paise. The six-month annualised forward cover closed unchanged at 5.35 per cent (5.40 per cent). "Trades are largely inter-bank. There was hardly any covering save for some scattered receiving...importers were covering only urgent requirements" dealers said. In the near terms, June premiums closed at 9/11 paise (10/11 paise), July at 24/27 paise (26/29 paise) with August quoting at 44/47 paise (46/49 paise) while in the far terms, February dollars closed at 179/182 paise (183/186 paise) with March at 205/208 paise (209/212 paise). "Demand forforward dollars is poor because the spot-rupee movement is being caused largely by inter-bank play, and less on account of any active corporate demand for dollars", dealers said.

FORECAST: Six-month annualised premium seen between 5.33-5.40 per cent levels on Wednesday.

Gilts

Long-term bond prices posted small gains of 5-6 paise on Tuesday. The 11.75 per cent 2006 was dealt up to Rs 102.45 (Rs 102.38) levels with the 12.40 per cent 2013 going at Rs 102.03 (Rs 101.97). The re-issued 11.99 per cent 2009 was seen at Rs 101.50 (Rs 101.40 levels). The 12.25 per cent 2008 went almost unchanged at Rs 103.35 as also the 12.60 per cent 2018 at Rs 100.36-Rs 100.39. "There is interest only at the long end of the market. There is also enough liqudity in the inter-bank markets", dealers said. In the short dated stocks, the 12.50 per cent 2004 was seen going higher at Rs 104.44, almost unchanged from its Monday's levels", a dealer with US-based bank said.

FORECAST: Long-bond prices seenholding firm on Wednesday.