Call rates eased on Friday by around 50 basis points to 7.50 per cent on account of reporting Friday. As most bank have covered their CRR requirements, there was lacklustre demand for funds in the market. The overnight call rates opened at 7.50-8 per cent and ruled at these levels throughout the day as against the previous close of 8-8.25 per cent.

"Stray deals were concluded at 7.90 per cent," dealers said. The rates finally closed at the opening level of 7.50-8 per cent. Meanwhile, the three-day money quoted between 8-8.25 per cent. The Reserve Bank of India on Friday mopped up Rs 25 crore through its three day fixed rate repo in government of India dated securities for parties holding SGL and current account. There was no inflow into the system through reverse repo. According to money market sources, the call rates are expected to rule tight, above the bank rates for a few days.

FORECAST: The call rates are expected to rule between 7.90-8.25 per cent on Saturday.

SpotDollar

The spot rupee strengthened by two paise on Friday to an intra day high of 42.50 against dollar owing to slightly high dollar supply into the system coupled with negligible demand for dollars. The Indian currency opened at 42.445/45 against dollar unchanged from their previous close. During the day owing to inter bank dollar selling on behalf of corporates, the rupee strengthened by two paise to close at 42.425/43 against dollar. During the day, rupee weakened to an intra day low of 42.45 against the greenback.

The Reserve Bank of India's reference rate for US dollar was Rs 42.43, two paise up from its previous peg of 42.45. Meanwhile, the Indian currency opened at 46.80 against euro, recorded an intra day high of 46.83, came down slightly during the day to 46.25 to finally settle at 46.37 against euro towards the close.

FORECAST: Rupee seen ruling between 42.42 and 42.51 on Monday.

Forward Premiums

Forward premiums ruled steady on Friday. The premium across all maturitiesopened at their previous closing level to finally settle one paise lower towards the close. The six month annualised premium was quoted at 7.1 per cent (7.12 per cent), three months at 6.7 per cent (6.95 per cent) and one month at 6.35 per cent (6.78 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 12.12.50 paise (12-13 paise), April at 35-37 paise (36-38 paise), May at 58-60 paise (59-61 paise), June at 85-87 paise (86-88 paise), July at 110-112 paise (110-113 paise), August at 135-137 paise (135-138 paise), September at 160-162 paise (161-164 paise), October at 189-192 paise (190-193 paise), November at 218-222 paise (219-222 paise), December at 246-248 paise (246-249 paise), January at 272-275 paise (273-276 paise) and February at 297-300 paise (298-301 paise).

FORECAST: Six-month annualised forward seen at 7-7.4 per cent on Monday.

Gilts

Gilts prices ruledstable on Friday. Short and medium term bond prices fell by one paise during the day. According to money market dealers, traders are realigning their securities portfolio's. "Banks which have majority of short dated papers in their portfolio are get out of short term papers and buying medium bonds," dealers said.

The 11.40 per cent 2000 paper was quoted at Rs 100.77 (Rs 100.77), 11.60 per cent 2002 paper at Rs 100.20 (Rs 100.24), 11.55 per cent 2001 paper at Rs 100.88 (Rs 100.88), zero coupon 2000 paper maturing on July 13 at Rs 87.13 (Rs 87.15), 11.78 per cent 2003 paper at 101.37 (Rs 101.38), 11.98 per cent 2004 paper at Rs 101.50 (Rs 101.50) and 12.50 per cent 2008 paper at Rs 101.40 (Rs 101.40).

FORECAST: Gilts prices are expected to rule stable on Saturday.