The overnight rates opened at 5.75-6.00 per cent on Tuesday, compared with their previous close of 5.00-5.50 per cent.

The rates moved in a narrow range throughout the day and finally closed at 5.00-5.50 per cent. According to market dealers, the call rates are ruling easy as there is adequate liquidity in the market.

The Reserve Bank of India did not receive any application for the three-day 5 per cent fixed-rate repos in Government of India dated securities. The Security Trading Corporation of India turnover was Rs 1,700 crore on a weighted average of 5.83 per cent. The Discount and Finance House of India extended market support to the tune of Rs 1,500 crore.

FORECAST: The call rates are expected to hover around 5-5.75 per cent on Wednesday.

Spot Dollar

The rupee opened weaker at 42.61/64 against the dollar on Tuesday compared with its previous close of 42.58/60. Good corporate demand for dollars, including bids by the Diamond Trading Corporation in early trades,saw the rupee touch its intra-day low of 42.66/67.

"A few exporters sold dollars in the spot at this level even as the dollar demand tapered off... this helped the rupee gain to 42.56/57," dealers said. However, corporate demand for the dollar towards the close of trades saw the rupee close at 42.61/64. Cash/spot was quoted at 0.25/0.50 paise and cash/tom at 0/0.25 paise, unchanged from Monday's levels.

Elsewhere, the Reserve Bank of India fixed its reference rate for the dollar at 42.61 compared with its previous fix of 42.59.

FORECAST: The rupee is seen in the 42.58-42.62 band on Wednesday.

Forward Premiums

Forward premiums fell across the board on Tuesday on receiving pressure.

The six-month annualised forward cover continued to post gains to close at 8.40 per cent compared with its previous close of 8.56 per cent. Premiums fell more in the far terms with January dollars ending at 196/200 paise (201/205 paise), February at 230/235 paise (235/237 paise), March at 263/267 paise(272/275 paise) and April at 298/302 paise (310/312 paise).

"Forward premiums tracked a weaker spot rupee in opening deals, but the dip in call rates also helped them cool off," dealers said. Overnight rates dropped to 5.50-5.75 per cent from early quotes of 5.75-6.0 per cent, before closing at 5-5.50 per cent. The one-year annualised forward cover closed at 9.18 per cent against its previous close of 9.48 per cent.

"Sentiment on the rupee in the forwards is slightly bullish," dealers said. FORECAST: The six-month annualised forward cover is seen at 8.35-8.40 per cent on Wednesday.

Gilts

The prices for short- and medium-dated government securities appreciated by 10 to 15 paise on Tuesday. The market also witnessed some trades in treasury bills maturing in August and September.

The most traded government securities on Tuesday were the short-dated ones. The zero coupon government paper maturing in 2000 was traded at Rs 80.52, the 1998 paper at a 13.65 coupon was traded at Rs 100.52whereas the zero coupon 1999 paper was traded at Rs 102.43.

The wholesale debt market of the NSE witnessed trading worth Rs 445.02 crore. The 13.65 per cent government loan maturing in 1999 was traded worth Rs 70 crore at a weighted yield of 9.60 per cent.

FORECAST: The government securities market is expected to be active on Wednesday.