"The refinance seems fully availed at the current level. In the absence of any major inflows during the week, call rates could rise further," a dealer at a private bank said. RBI data showed refinance outstanding at bank rate rose to Rs 13,300 crore on June 6 from Rs 13,040 crore on the previous day.

Dealers said Wednesday's reverse repo auction will signal the RBI's intent on short-term liquidity. "If the RBI wants to raise money from the market for the latest bond issue, it has to inject some liquidity," a dealer said. The call rates ended at 8.75-9%.
FORECAST: Call rates seen around 9 per cent on Thursday.

SPOT DOLLAR
The rupee ended Wednesday again at an rall-time closing low after dollar purchases by banks and corporates, but failed to breach its weakest intra-day levels. The rupee opened at 44.665/675, unchanged from Tuesday's close. The rupee touched the 44.75 level briefly and rebounded as both banks and importers shied away from dollar purchases above that level. The rupee ended at 44.725/735. Dealers said the rupee's next move was crucial.

If the 44.75 level proved to be a tough psychological resistance for the dollar and encouraged export sales and conversion of foreign remittances, there could be a small rebound. But the possibility of the level being breached and the market taking the rupee to 45 per dollar could not be ruled out, dealers said. The rupee had been relatively stable over the past two days.Cash/spot ended at 0.75/1 paise, cash/tom at 0.50/0.75 paise and tom/spot at 0.25/0.50 paise. The RBI fixed its rate for the dollar at 44.69 from the previous 44.67.
FORECAST: The rupee seen weaker on Thursday, may breach 44.75.

FORWARD PREMIUMS
Forward dollar premia ended lower on Wednesday indicating the dollar demand was purely in the spot market and also reflecting the liquidity boost the market received from the RBI. There was some receiving by PSU banks, dealers said.

The RBI on Wednesday lent Rs 12,850 crore through one-day reverse repos, comforting the market that had been concerned about a fresh Rs 4,000 crore government bond auction on Thursday. The six-month premium ended at an annualised 2.90%, off the morning's 2.97 % and compared with Tuesday's close of 3.10 %. The one-year premium ended at 3.01% against Tuesday's 3.14% .

June dollars ended at 7/8 paise, July at 18/19 paise, while at the far end November closed at 61/63 paise and December at 72/74 paise. "There was good receivings in the three and six month maturities," said a dealer with a private bank. In offshore markets, the six-month rupee was firmer,quoting at 45.50/90 per dollar. That compares with bids at 45.92 a week ago.
FORECAST: Premiums seen range-bound on Thursday.

GILTS
Overnment bonds rose marginally in late afternoon deals on Wednesday after the RBI injected funds into the market through a reverse repo auction. The 11.15 per cent 2002 bond rose to Rs 102.62 from Rs 102.60 in morning deals. The 12.50 per cent 2004 bond rose to Rs 108.77 from Rs 108.70 before the auction. The RBI accepted 26 bids worth Rs 1,285 crore at the one-day reverse repo auction on Wednesday. It set a cut-off rate at 9%, compared to 9.05% it had set at its June 5 auction.

The RBI did not accept any bids on June 6. Dealers were cautious on the outlook for the market ahead of the bond auction on June 8. Volatility in the foreign exchange market also weighed on sentiment in the bond market. The rupee briefly touched its intra-day lowest level of 44.75 per dollar in Wednesday afternoon deals Dealers said a further fall in the rupee will prompt players to offload securities to fund dollar purchases.
FORECAST: Bond prices seen a tight range on Thursday.

(Compiled by Anurag Joshi)