Call rates eased to an intra-day low of 8.90 per cent on Tuesday owing to easy liquidity. Inflow of Rs 3,000 crore on account of payment of zero coupon 2000 paper saw the rates drop. Overnight rates opened at 9-9.15 per cent compared with their previous close of 9.50 per cent. Call rates moved in a narrow 8.90-9.15 per cent band throughout the day. The rates finally closed at 8.90-9 per cent. "A few stray deals were also struck at 9.15 per cent," a dealer said.

However dealers said that the private placement worth Rs 3,000 crore will have little impact on call rates. "Only when the securities are sold through open market operations, will call rates tighten," dealers said. According to dealers, the current tightness is unlikely to ease even after redemption unless the refinance taken by primary dealers last week is repaid," it said. The Reserve Bank of India on Tuesday did not receive any application for its three-day fixed-rate repos.

FORECAST: Call rates are seen at 8.50-9.25per cent on Wednesday.

Spot Dollar

The rupee moved in a narrow 4 paise band against the dollar on Tuesday owing to lacklustre trading. The Indian currency opened at 42.49/50, unchanged from its previous close. Throughout the day, the rupee ruled at 42.49/51 and closed at 42.51/527. "The forex market witnessed little activity in the absence of major inflows or outflows," dealers said. According to dealers, the existing demand for dollars is met by the supply. The RBI reference rate for the dollar was Rs 42.50, unchanged from its previous peg of Rs 42.50.

The rupee remained rangebound against the euro throughout the day. The rupee opened at 49.26 compared with the previous close of 49.03, touched a high of 49.46, dropped to an intra-day low of 49.15 and finally closed at 49.38 against the euro.

FORECAST: The rupee is seen at 42.47-42.55 on Wednesday.

Forward Premiums

Forward premiums opened at Monday's levels on Tuesday. However, some covering by corporates in the afternoon sawpremiums firm up by 2 paise. "Marginal paying interest was seen by importers which pushed premiums up by 2 paise," forex dealers said. The six-month annualised cover closed at 6.6 per cent (6.27 per cent), three months at 6.2 per cent (6.12 per cent) and one month at 5.4 per cent (5.65 per cent). January premium closed at 5-8 paise (6-7 paise), February at 23-25 paise (22-24 paise), March at 44-47 paise (44-47 paise), April at 72-75 paise (71-73 paise), May at 92-95 paise (91-93 paise), June at 116-118 paise (116-118 paise), July at 145-147 paise (143-145 paise), August at 171-174 paise (169-172 paise), September at 198-200 paise (195-198 paise) and October at 225-228 paise.

FORECAST: The six-month annualised premium is seen at 6-6.5 per cent on Wednesday.

Gilts

Easing of call rates to 8.90-9 per cent saw 1-4 paise improvement in gilt prices on Tuesday. "Marginally higher buying interest was seen in the gilt market," a dealer said. "The prices went up by 4 paise in the morning and laterfell by 2 paise owing to marginal selling. However, the prices inched up towards the close by 2-3 paise. 11.40 per cent 2000 paper quoted at Rs 100.20 (Rs 100.19), 11.55 per cent 2001 paper at Rs 100.19 and 11.75 per cent 2001 paper at Rs 100.60. The wholesale debt market of the NSE witnessed trades worth Rs 353.22 crore (Rs 611.75 crore). 11.40 per cent government loan maturing in 2000 traded worth Rs 75 crore at a weighted yield of 11.26 per cent. 13.65 per cent government loan maturing in February 1999 traded worth Rs 75 crore at a weighted yield of 8.79 per cent. A repo trade was transacted worth Rs 25 crore at 9.50 per cent for a repo term of 11 days.

FORECAST: Gilt prices are seen 1-2 paise higher on Wednesday.