Call rates eased a little towards the close on Wednesday after the rising trend witnessed in the early part of the day. Overnight rates opened relatively higher at 8.75-8.90 per cent, but dropped to 8.25-8.50 per cent at the close owing to reduced borrowing interest.

Most transactions were conducted at 8.50-8.85 per cent, dealers said. There was little pressure on the rates as most banks had earlier rushed to cover positions ahead of the reporting Friday on December 18. Call rates have been trading above 8.50 per cent since the beginning of the current week because money supply was expected to be squeezed owing to outflows for advance-tax payments.

The Discount and Finance House of India extended market support to the tune of Rs 2,300 crore.

FORECAST: Call rates are seen at Wednesday's levels on Thursday.

Spot Dollar

The rupee posted small gains on Wednesday on poor demand for dollars in the inter-bank foreign exchange market. The Indian currency opened at42.54/55, unchanged from its previous close, and touched an intra-day high of 42.52/51. Towards the close, mild corporate demand for dollars pulled the rupee down to 42.53/54.

"Most dealers are off... Dollar requirements have also gone down with the downtrend in the economy. Nominal demand for dollars was met with dollar sales by corporates," a dealer with a European bank said. Cash/spot closed at the overnight 1/1.25 paise, cash/tom at 0.25/0.50 paise (0/0.25 paise) and tom/spot held steady at 0.25/0.50 paise. Elsewhere, the Reserve Bank of India fixed the reference rate for the dollar at Rs 42.55 as against Tuesday's Rs 42.57.

FORECAST: The rupee is seen in the 42.50-42.54 band on Thursday.

Forward Premiums

Forward dollar quotes continued to hold steady with little corporate interest, and gains in the spot rupee on Wednesday. "Forward volumes have come down now that banks and corporates have been prevented from taking unlinked exposures by the Reserve Bank of India," dealers said andadded: "Call rates, which opened slightly higher at 8.80-9.00 per cent, ruled marginally lower at 8.60-8.80 per cent till around the afternoon, helping premiums from inching higher."

In the near terms, January premiums quoted at 25-28 paise (26-29 paise), February 49-52 paise (50-53 paise), March 79-82 paise (80-83 paise), April 110-114 paise (112-115 paise). In the far terms, May closed at 141-144 paise (142-145 paise) and June 173-176 paise (172-176 paise). The six-month annualised premium ended at 7.66 per cent (7.67 per cent).

FORECAST: The six-month premium is seen at 7.60-7.64 per cent on Thursday.

Gilts

The secondary market for government securities remained subdued on Wednesday. Short-dated papers, however, gained by 3-5 paise on late buying interest. The wholesale debt market of the National Stock Exchange witnessed trading worth Rs 399.62 crore. The 11.75 per cent gilts maturing in 2001 traded worth Rs 130 crore at a weighted yield of 11.50 per cent. The zero coupon governmentsecurity maturing in January 1999 traded worth Rs 35 crore at a weighted yield of 9.51 per cent. Three repo trades totalling Rs 30 crore were transacted at a repo rate of 9.35 per cent for 14 days each.

The National Stock Exchange's Mibid overnight rate was at 8.82 per cent, 9.02 per cent for 14 days, 9.39 per cent for one month and 10.33 per cent for three months. The Mibor rates were 8.95 per cent for overnight, 9.42 for 14-day, 9.98 per cent for one month and 11.03 per cent for three months.

FORECAST: The secondary market for gilts seen steady on Thursday.