The overnight rates opened at a 8-8.5 per cent on Tuesday, compared with their previous close of 7.25-7.50 per cent, owing to heavy demand for funds and constrained supply, dealers said. Later, due to better availability of funds, the rates eased to finally close at 7.50-7.75 per cent. Most deals were struck at 7.65-8 per cent. There was ample liquidity in the system, dealers said. The Reserve Bank of India mopped up Rs 1,219 crore through a three-day fixed-rate repos in government of India dated securities for parties holding SGL and current accounts.

The Securities Trading Corporation of India turnover was Rs 2,900 crore ona weighted average rate of 7.76 per cent. The Discount Financing House of India injected Rs 1,600 crore into the system.

FORECAST: The call rates are likely to rule at Tuesday's level on Wednesday.

SPOT DOLLAR

The spot rupee breached the 43 mark on Tuesday to touch a new low of 43.05 against the dollar. It reacted to finance minister YashwantSinha's statement that the Reserve Bank of India (RBI) will not use its reserves to prop up the rupee. The rupee opened at 42.85/90 and immediately weakened to 42.95. At this point, panic-driven import covering saw the rupee fall past the 43 mark.

Dealers said that deals were confirmed at 43.05 and there were quotes at 43.08, but no deals were struck. After the first hour of trading, the rupee stabilised and clawed back to 42.89/91. Most dealings were conducted at these levels, but the rupee marginally weakened to close at 42.90/92.

Dealers said that the State Bank of India was not seen shoring up the rupee and the RBI also kept away from intervening.

FORECAST: Month-end demand from importers will see the rupee cross the 43 mark on Wednesday.

FORWARD PREMIUMS

The forward rupee remained stable on Tuesday as exporters came and received as soon as the premiums touched higher levels. The six-month forward rose to 13 per cent during the day, but later fell to close at 12.25 per cent.

"Exporters are selling as soon as the premiums rise, which is causing a downward movement in the premiums," a dealer in a private bank said. Dealers said that they had expected the six-month forward to harden further on Tuesday, but continuous receiving by exporters kept it on the lower side.

The one-month forward eased marginally to close at 13.25 per cent, down from its previous close of 13.95 per cent and the one-year forward closed at 12.40 per cent.

FORECAST: The six-month forward premium is expected to rule at 12.25-12.30 per cent on Wednesday.

GILTS

Prices in the government securities market remained firm at Monday's level on Tuesday. The market did not witness much activity, except for a few trades in the short-dated securities, dealers said.

According to dealers, there is no buying interest in the market as the interest rates are likely to move northward. Traders are not taking any positions fearing a further fall in the prices.

The wholesale debt market of the NSEwitnessed trading worth Rs 139.15 crore. The zero coupon government loan maturing in 2000 was traded for Rs 20 crore at a weighted yield of 11.17 per cent. The 364-day treasury bills maturing on October 9, 1998, were traded for Rs 38 crore at a weighted yield of 9.25 per cent. A repos trade worth Rs 2 crore was transacted at 7.5 per cent for a repos term of three days.

FORECAST: Prices in the government securities market are expected to fall on Wednesday.