This is for the second day in a row that the central reduced the repos rate. On Tuesday, the repos rate was reduced to 9.75% from 10%. The RBI accepted 14 bids for Rs 4,355 crore at its one-day repos and 23 bids for Rs 5,005 crore at its five-day repos.

FORECAST: Call rates seen softer on Thursday.

Spot dollar
The rupee held firm against the greenback on Wednesday. Opening the day at 46.04/05, little changed from its last close, the rupee hardly moved during the day. "The rupee declined a shade to 46.0550/0650 in late morning deals... a few banks reportedly long on dollar in early trade on expectations of dollar demand from corporates and importers later during the course of the day" a dealer said, adding: "Lack of adequate follow-up demand led banks to unwind dollar positions in late afternoon deals.

Spot-trades remained quiet and range-bound in the absence of market-moving factors".It dipped to 46.11/1150 on Tuesday on corporate interest for dollars. "The rupee seems to have hit a steady phase for now...

dollar-demand was matched by an almost equivalent supply for most of the day. Importers were reluctant to make large spot-dollar purchases", a dealer said. The RBI fixed its reference rate for the dollar at 46.05 as against its previous peg at 46.07.

FORECAST: Rupee seen at 46.10 levels on Thursday.

Forward premiums
Forward premiums quoted softer on Wednesday. The sixth-month and one-year annualised forward premium ended lower at 4.50% (4.61%). "A largely steady spot-rupee and softer call rates saw forward premiums close softer", a dealer said, adding: "Forwards were moderately active and premiums continued to show sharp declines on persistent heavy receiving interest as exporters unwound long forward dollar positions... fairly easy conditions in call market also exerted downward pressure on premiums". October dollars quoted at 12/13 paise, November at 27/29 paise while in far forwards, April closed at 115/117 paise with May at 131/133 paise. "Forward premiums ended sharply lower after the RBI cut the repo-rate to 9.50% from 9.75% signalling ample liquidity in the system and a stable rupee", a dealer with a European bank said.

FORECAST: Premiums seen quoting softer on Thursday.

Gilts
Bond prices rose a shade on Wednesday after the Reserve Bank cut its repos rate by another 25 basis points to 9.50%. The 11.40% 2008 was heavily traded and was seen at Rs 100.10; the 12.50% 2004 at Rs 105.0500. "Trades turned active after the central bank cut the repos rate for the second day in a row", an analyst with a primary dealership said. On Tuesday, the repos rate was reduced to 9.75% from 10%. The central bank accepted 14 bids for Rs 4,355 crore at its one-day repos and 23 bids for Rs 5,005 crore at its five-day repos today. On the National Stock Exchange's wholesale debt segment, trades worth Rs 1,826 crore were seen. Trades worth Rs 635.16 crore were seen in the 11.40% 2008 at a wieghted average yield of 11.44% with those in the 12.50% 2004 at Rs 415 crore at 10.75%.

FORECAST: Bond prices seen holding steady on Thursday.

(Compiled by Raghu Mohan)