The overnight call money rates ruled rangebound on Wednesday. The overnight rates opened at 8.10-8.30 per cent in a squarish interbank market owing to lacklustre demand for funds and tight liquidity in the system. The call rates opened at 8.10-8.30 per cent slightly higher than its previous close of 8.10-8.25 per cent. Throughout the day, the rates ruled at the opening level to finally close at these levels.

"Most primary dealers have already taken refinance from RBI at 6 per cent. Thus the market is not witnessing any demand for funds as the overnight rates are luring much higher than the repo rate," dealers said. RBI did not receive any application for a three-day fixed rate repo in government of India undertaking for parties holding SGL and current account. No inflows came into the system on Wednesday through reverse repo. The National Stock Exchange's overnight Mibid and Mibor were quoted at 8.19 and 8.32 per cent.

FORECAST: The call rates are expected to rule between8-8.40 per cent on Thursday.

Spot Dollar

The spot rupee strengthened to an intra day high of 42.44/445 against dollar gaining almost three paise from its previous closing level of 42.44/47 against dollar owing to marginally high supply in the system coupled with lacklustre demand for the greenback. The Indian currency opened at 42.45/46 against the previous close of 42.44/47 against dollar. Throughout the day, the rupee recorded an intra day low of 42.46 against the dollar.

However, due to interbank selling lot of supply came into the system which pushed the rupee up from its opening level by one paise to 42.44/445 against dollar. The rupee finally closed at these levels. The RBI reference rate for US dollar was Rs 42.44, three paise up from its previous level of Rs 42.47. Meanwhile, the Indian currency opened at 46.17 against euro, recorded a days high of 46.53 to finally settle at 46.48 against the euro.

FORECAST: Rupee seen ruling between 42.43 and 42.51 on Thursday.

ForwardPremiums

Forward premiums ruled steady on Wednesday. The premium across all maturities opened at their previous closing level. However due to lacklustre trading in the forwards the rates ruled stable throughout the day. The six month annualised premium was quoted at 7.12 per cent (7.15 per cent), three months at 6.95 per cent and one month at 6.78 per cent as against the previous level of 7.1 per cent.

According to dealers, importers are not paying at the existing rates as they do not find the rates attractive enough to pay." In the near forwards, March closed at 14/15 paise (14-16 paise), April at 39-40 paise (39/41 paise), May at 61-63 paise (62/65 paise), June at 90-91 paise, July at 114-116 paise, August at 140-141 paise, September at 165-167 paise (165/168 paise), October at 194-196 paise (194/197 paise), November at 222-2224 paise (222/226 paise), December at 250-253 paise and January at 277-280 paise.

FORECAST: Six-month annualised forward seen at 7-7.3 per cent onThursday.

Gilts

Short and medium term gilts prices fell by 2-4 paise on Wednesday owing to marginally higher selling of short dated papers by banks. Activities were confined to 364-day T-bills and securities maturing before 2005. However, some stray deals were concluded in ten-year papers maturing in 2008. 364-day T-bills maturing on February 25 was traded at 9.95 per cent.

Meanwhile, one year T-bill maturing on February 11 was traded at 9.94 per cent. 11.40 per cent 2000 paper traded was at Rs 100.70, 11.55 per cent 2001 paper at Rs 100.90, 11.75 per cent 2001 paper at Rs 101.33, 12 per cent 1999 paper at Rs 100.10, 13.40 per cent 1999 paper at Rs 102.40 and 12.25 per cent 2008 paper at Rs 101.40. According to money market sources, the securities prices are expected to firm up during the week.

FORECAST: Trading is likely to be concentrated in the short and medium term papers on Thursday.