The overnight call rates firmed by 5-10 baisis points owing to tight liquidity conditions. The call rates opened at 8.10-8.15 per cent on Friday as against the previous close of 8-8.10 per cent. Throughout the day, the rates remained rangebound owing to lacklustre trading.

The rates finally closed at their opening level of 8.10-8.15 per cent. According to money market dealers, the overnight call rates are not easing to the floor level of 6 per cent due to high demand for funds and tight liquidity conditions prevailing in the market. "The rates are expected to ease by the end of this fortnight when the money released through CRR cut will come into the system. As tax outflow is expected to move out of the system in the third week of March, the market will easy liquidity condition for a specific period," dealers said. The Reserve Bank of India on Friday mopped up Rs 12 crore through its four day fixed rate repo in government of India dated securities.

FORECAST: The callrates are seen between 7.90-8.20 per cent on Saturday.

Spot Dollar

The rupee moved in a narrow four paise band between 42.51/54 against dollar. The Indian currency opened at 42.51/52, unchanged from their previous close. During the day owing to high dollar demand by corporates in the spot, the rupee weakened by 2 paise to 42.53/54 against the greenback.

The initial demand was short lived as some supply came into the system towards the fag end which strengthened the rupee by two paise to 42.51/52 against dollar. The rates finally settled at 42.51/52 against dollar towards the close. The RBI reference rate for US dollar quoted was at Rs 42.53, unchanged from the previous peg. Meanwhile, euro was quoted at 1.084 dollar throughout the day. The Indian currency strengthened against euro from its previous closing levels on Friday as it opened at 45.84 against euro, recorded a high of 46.14 to finally close lower at 46.06 against euro.

Forecast: The rupee is expected to rule between 42.48/56 againstdollar on Monday.

Forward Premium

Far-end forward premiums firmed up by 5 paise on Friday after the Indian currency depreciated by 4 paise during the day. "Lots of paying interest was seen in the market by corporates in the morning. However, towards the close, the premiums softened by five paise to finally close slightly lower from its opening level. "Some receiving came towards the fag end which eased the premiums," dealers said.

The six-month annualised premium was quoted at 7.3 per cent (7.15 per cent), three months at 7.1 per cent (6.6 per cent) and one month at 7.1 per cent (7 per cent). March premiums closed at 16-18 paise (17-18 paise), April at 43-46 paise (44-46 paise), May at 65-68 paise (67-69 paise), June at 93-97 paise (95-97 paise), July at 117-119 paise (121-123 paise), August at 143-145 paise (148-150 paise), September at 170-173 paise (174-177 paise), October at 199-201 paise, November at 226-229 paise (203-205 paise), December at 282-285 paise (259-261 paise) and January at282-285 paise (287-289 paise).

FORECAST: Six-month annualised forwards seen in a band of 7--7.8 per cent on Monday.

Gilts

Gilts prices ruled steady on Friday. Short and medium term gilts prices opened at yesterday's closing level. During the day, the prices fell marginally by 1-2 paise to finally close at the opening level. "Some buying interest was seen in short term papers like T-Bills and papers maturing below four years," dealers said.

The 364-day T-bills were quoted at 9.95 per cent and 91-day T-Bills at 8.65/70 per cent. However, no trades were reported in 14-day T-Bills. The 11.40 per cent 2000 paper was quoted at Rs 100.76, 11.55 per cent 2001 paper at Rs 100.80, 12.50 per cent 2004 paper at Rs 103.25, 13.40 per cent 1999 paper at Rs 102.55 and 11.15 per cent 2002 paper at Rs 99.58. The wholesale debt market of National Stock Exchange recorded trades worth Rs ... crore as against Rs 789.20 crore on the previous day.

Forecast-Gilts prices are expected to firm up onSaturday.e