Call rates continued to quote in a fine band between 8.25-8.30 per cent on Thursday. Opening the day at a wide range of 8.30-8.35 per cent, call rates hovered at these levels throughout the day in squarish market. "Though there were good demand for funds, adequate liquidity in the system kept call rates steady", dealers said. At close, call rates were seen at 8.25-8.30 per cent. Most of the deals were conducted at 8.25-8.30 per cent level. The Reserve Bank did not receive any response to its three-day 6 per cent fixed rate repos held today. The NSE pegged its overnight Mibid and Mibor at 8.21 per cent (8.15 per cent) and 8.31 per cent (8.28 per cent) with the fortnightly at 8.42 per cent (8.40 per cent) and 8.99 per cent (8.94 per cent) respectively.

FORECAST: Call rates seen at 8.30 per cent levels on Friday.

Spot Dollar

The rupee closed lower by 10 paise at 43.40/42 on Thursday. Opening the day at 43.35/36, lower from its overnight close at 43.3150/33, good demand fordollars from corporates and banks saw the rupee go to 43.3550/36 levels by mid-session. "There is a feeling in the market that the Kargil crisis will continue to cast its shawdow for some time. Corporate demand for dollars was not met by supply today", a dealer with a European bank said, adding: "Quite a few banks went long on the dollar in anticipation of further corporate interest". At close of trades, the rupee was seen at its day's low of 43.40/42 levels. Cash/spot quoted at 1.50/1.75 paise (0.50/1 paise), cash/tom unchanged at 0.25/0.50 paise with tom/spot at 1.25/1.37 paise (0.25/0.50 paise). The Reserve Bank pegged its reference rate for the dollar at 43.36 from its previous 43.29.

FORECAST: Rupee may test 43.40-43.42 levels on Friday.

Forward Premiums

Forward premiums eased by one to two paise on Thursday. The six-month annualised forward cover ruled at 4.77 per cent (4.80 per cent). "Premiums went a shade softer as the action was largely in the spot-market. Demand for forwarddollars was almost non-existent. The forward dollar market was largely quite", a dealer with a European bank said. August dollars quoted unchanged at 24/26 paise (25/27 paise) with September at 40/42 (41/43 paise). February premiums were seen at 139/140 paise (140/143 paise), March at 159/161 paise (161/165 paise) and April at 181/182 paise (184/186 paise). "There is little paying or receiving interest. Exporters are seen coming in only if the rupee were to weaken sharply over the next few days", a dealer with a brokerage said.

FORECAST: Six-month annualised forward seen at 4.75-4.80 per cent levels on Friday.

Gilts

Dull trades were seen in the bond market on Thursday. The 11.98 per cent 2004 was dealt at Rs 102.62 levels (Rs 102.64) with the 11.90 per cent 2007 going at Rs 101.06/07 (Rs 101.07/09)." The fall in the spot-rupee to 43.42 levels saw trading in the bond market getting affected. Kargil continues to affect trading sentiment", bond dealers said, adding: "Trades will continue tobe dull until the spot-rupee recovers or holds steady. There are also rumours that the Centre may hit the markets with a dated-stock issue sometime early next week". The 11.50 per cent 2004 was dealt lower at Rs 100.72-100.73 (Rs 100.76); 13.05 per cent 2000 higher at Rs 100.68 (Rs 106.65); 11.40 per cent 2000 unchanged at Rs 100.81 levels with the the 11.68 per cent 2002 at Rs 101.62 (Rs 101.65). The 11.55 per cent 2001 was dealt at Rs 101.25 (Rs 101.22-101.25).

FORECAST: Bond prices seen holding current levels on Friday.

(Complied by Raghu Mohan)