The near term premia rose reflecting a volatile spot rupee. Nervousness in the foreign exchange market hit buying sentiment in short bonds, they said.Long-term bonds remained subdued as traders continued to remain wary about a fresh bond auction announcement by the government. "Traders are selling short-dated bonds to book profits. Prices have dipped over Tuesday's levels as with a rise in premia, short-term bonds prices are always first hit," a primary dealer said.

The 11.75 percent 2001 bond was dealt at Rs 102.98 in noon trade compared to Tuesday evening's Rs 103.07.

The medium term 9.90 percent 2005 was traded at Rs 100.40 compared to Tuesday's Rs 100.44. The rupee slipped to all-time low of 43.75 per dollar on Wednesday morning trade before recovering to 43.72/73.

The six-month premia rose to 2.22 per cent on Wednesday morning from 2.15 percent on Tuesday on increased hedging by importers who grew nervous about the rupee's stablity.

Dealers said buying in long-term bonds remained lacklustre as they expected the government to announce a fresh government bond auction to take advantage of the comfortable liquidity conditions in the money market.

Call money was traded at 6.95-7.10 per cent in noon deals.

The Central Government has already raised Rs 170 billion mainly through issue of long dated securities in April and May against a gross budgeted programme of Rs 1.17 trillion for 2000/01. Higher supplies of long term bonds in the primary marketalong with higher inflation figures have unnerved bond traders, dealers said.