Call money rates opened easy at 8.75-9 per cent on Wednesday as against the previous opening level of 9 per cent. Throughout the day, the rates moved in a band of 8.75-9.10 per cent. The rates ruled easy in the morning due to lacklustre demand for funds. However at noon, the rates tightened to 9.05-9.10 per cent owing to high demand for funds.

"Most corporates were borrowing funds from call market are paying in forwards which created a drain on funds in the overnight market," said a money market dealer.

The rates finally closed at 9.05-9.10 per cent against the previous level of 8.80 per cent. The Reserve Bank of India was able to mop up only Rs 18 crore through its three-day fixed rate repo in government of India dated securities for parties holding SGL account as against the previous day's mopup of Rs 500 crore. Market dealers expect the overnight rates to ease during the week.

FORECAST: Call rates are expected to rule between 8.50-9.20 per cent on Thursday.

SpotDollar

The rupee weakened to an intra-day low of 42.57/58 against dollar on Tuesday owing to panic buying by banks on behalf of corporates. The Indian currency strengthened by two paise towards opening at 42.435/445 against dollar as compared with the previous close of 42.44/45 against the dollar.

However, after the economic survey report was made public, panic buying by banks on behalf of corporates pushed the rupee down to 42.54/55 against dollar from the opening level of 42.435/445. "State Bank of India reportedly bought dollars which triggered a fall in the Indian currency against the greenback," said a forex dealer from a foreign bank.

The Indian currency finally closed at 42.57/58 against dollar. Cash spot and cash tom were quoted at 3.25-3.50 paise. The RBI reference rate for US dollar was Rs 42.49 as against the previous peg of Rs 42.44. Meanwhile, the euro was quoted at 1.05 dollar on Wednesday. The Indian currency opened at 46.55 against euro, recorded a high of 46.81 to finally close at46.77 against euro.

FORECAST: Rupee seen between 42.45 and 42.70 on Thursday.

Forward Premiums

Forward premiums across all maturities opened at their previous closing level. However, the forward premiums shot up sharply by 10-15 paise owing to high paying pressure after the Indian currency weakened to an intra-day low of 42.57/58 against the dollar.

"Hectic covering by importers saw sharp increase in forward premium," dealers said. The six month annualised premium closed at 8 per cent (7.2 per cent), three months at 7.9 per cent (6.9 per cent) and one month at 7.33 per cent (6.2 premium). The March premium closed at 26-28 paise (21-24 paise), April at 56-59 paise (50-52 paise), May at 81-84 paise (72-75 paise), June at 110-113 paise (100-102 paise), July at 139-142 paise (125-127 paise), August at 170-172 paise (151-154 paise), September at 200-202 paise (179-182 paise), October at 230-233 paise (208-211 paise), November at 261-264 paise (237-240 paise), December at 291-295 paise(267-270 paise).

FORECAST: Six-month annualised premium seen between 7-5-9 per cent levels on Thursday.

Gilts

Easy call rates improved short term gilts prices by 1-2 paise on Wednesday. Due to bank strike and the budget (which will be presented on Saturday), most traders were concluding deals for Saturday and Monday at 1-2 paise lower than current price.

"Most deals were struck in short and medium term bonds," dealers said. The 11.40 per cent 2000 was traded at Rs 100.28 (Rs 100.26), 11.55 per cent 2001 at Rs 100.275 (Rs 100.25), 11.68 per cent 2002 paper at Rs 100.15 (Rs 100.14), 12.50 per cent 2004 paper at Rs 102.26 (Rs 102.25), 11.64 per cent 2000 paper at Rs 100.67.

FORECAST: Gilts prices are expected to firm up on Thursday.