Overnight rates ruled between 10.10 and 10.25 per cent on Thursday. Opening the day at 10-10.25 per cent, unchanged from its last close, call rates were on a downward course throughout the day. "Demand for funds tapered off on the eve of Reporting Friday... call rates were softer compared to Wednesday's intra-day levels at 10.50-10.75 per cent", a dealer with a US-based bank said. Call rates have been softer this week following last Saturday's move by the Rbi 's placed seventeen 364-day T-Bills on its open market operation (OMO) window at between 10 per cent and 10.35 per cent. Call rates were seen at 10.10-10.15 per cent levels at close of trades. Elsewhere, the NSE pegged its reference rate for the overnight Mibid and Mibor at 10 per cent (10.23 per cent) and 10.15 per cent (10.50 per cent) with the fortnightly one at 10.16 per cent (10.19 per cent) and 10.85 per cent (11.00 per cent).

FORECAST: Call rates seen at 10.20 per cent levels on Friday, could dip below 10 per cent.

SPOT DOLLAR

The rupee held rocksteady against the dollar on Thursday. Opening the day at 43.3950/40, little changed from its overnight close, corporate demand for dollar in early trades saw the rupee drift lower to 43.44/45 by mid-session. "There was a bit of corporate demand, but volumes were poor... the bulk of trades were inter-bank. The State Bank bought dollars at 43.41 levels", a dealer with a Gulf-based bank said. By close of trades, the rupee had gained a shade to 43.41/42. Cash/tom quoted 0.50/0.6250 paise (0.50/0.75 paise), cash/spot at 2.50/3 paise (1.25/1.50 paise) with also tom/spot at 2/2.25 paise (1.25/1.50 paise). The Reserve Bank pegged its reference rate for the dollar at 43.45 as against its previous 43.39. Elsewhere, the Euro opened the day at 46.59 (46.90) against the rupee, went to an intra-day high of 46.87 (47.29) before closing at 46.75 (46.74).

FORECAST: Rupee seen at 43.3950/41 levels on Friday.

FORWARD PREMIUMS

Premiums were stable on Thursday. The six-month annualised forward premium was quoted at 5.53 per cent (5.55 per cent). "Trades are dull... premiums went a tad higher when the spot rupee went to 43.45 levels. Most of the trades are inter-bank", a dealer with a US-based bank said. October premiums finished 3/4 paise (6/7 paise) with April at 124/125 paise (127/128 paise) and May at 144/145 paise (146/147 paise). Premiums have softened after the Reserve Bank's placed seventeen 364-day T-Bills on its open market operation (OMO) window at yields between 10 per cent and 10.35 per cent last Saturday. "The State Bank was seen receiving. There was a lot of receiving in the near forwards... On the whole, the trend in the forwards was one of stable quotes. There is hardly buying interest from corporates though", a dealer with a brokerage said.

FORECAST: Six-month annnualised forward cover seen at 5.54 per cent levels on Friday.

GILTS

Bond prices held steady in early trades on Thursday, but moved up after the Reserve Bank announced private placement of the 12.29 per cent 2010 for Rs 3,500 crore on 22 October. The 12.29 per cent is to be priced at Rs 103.75. The 12.32 per cent 2011 finished at Rs 103.46-103.48 levels after quoting in early trades at Rs 103.40-104.44; 11.90 per cent 2007 bond at Rs 102.78-102.80 (102.75-102.77); and the 11.99 per cent 2009 at Rs 102.46-102.48 (Rs 103.40). "The market is relieved that there will not be any additional pressure on liquidity... bond prices move up two to three paise after news of the private placement hit the market. Bid/ask quotes also narrowed down", a dealer with a primary dealership said. Bond prices had gained since last Saturday after the Reserve Bank's placed seventeen 364-day T-Bills on its open market operation (OMO) window at attractive yields between 10 per cent and 10.35 per cent.

FORECAST: Gilt prices seen may gain a shade in intra-day trades on Friday.

-- (Compiled by Raghu Mohan)