Call rates softened to 6-6.05 per cent at close on Wednesday. Overnight rates opened the day 6-6.50 from its last close at 5.25-5.75 per cent as demand for funds tapered off with just two days left for Reporting Friday. Inflows from the maturing 12 per cent 1999 and interest payment on cash reserve ratio balances helped cool call rates. "Most banks have borrowed ahead of Reporting Friday. Inflow from maturing securities and poor demand for funds saw most banks opting to invest in bonds and the three-day 6 per cent repos", a dealer at a US-based bank said. At the RBI repos, Rs 6,535 crore went out. "There is enough liquidity in the system, but call rates could tighten up a bit Thursday as the impact of today's repos outflows impacts on the market", dealers said. The NSE Mibid and Mibor were pegged at 6.04 per cent (7.26 per cent) and 6.32 per cent (7.53 per cent) respectively.

FORECAST: Call rates seen at 6-6.25 per cent levels on Thursday.

Spot dollar

The rupeerecovered intra-day high to 42.6450 before closing a shade weaker at 42.6769. Opening the day at 42.66/68, slightly lower from its overnight close at 42.65/67, dollar supplies and profit taking saw the rupee rule steady at 42.65 levels.

"Corporate demand for dollars was seen in early trades, which took the rupee to an intra-day low of 42.7570. Receiving by exporters in the spot saw the rupee recover to 42.6450 levels before closing a shade lower," a dealer at a brokerage said. Cash/spot were quoted unchanged at 0.25/0.50 paise cash/tom and tom/spot at 0/0.25 (0.25/0.50 paise).

The Reserve Bank of India pegged its reference rate for the dollar at 42.64, 13 paise lower from Tuesday's 42.51. Meanwhile, the Euro opened the day at 46.20 (45.85) against the rupee, went to an intra-day high of 46.26 (45.92) before finishing at 46.03 (45.75).

FORECAST: Rupee seen in a range of at 42.60-42.65 on Thursday.

Forward premiums

Forward premiums came off from their overnight levels on Wednesday.The benchmark six-month annualised forward cover closed at 6.83 per cent (7.02 per cent).

"Forwards inched upwards in early trades as the spot rupee went to its intra-day low of 42.7550 levels against the dollar. Receiving by exporters in the forwards, and by the State Bank of India for the month of May saw premiums soften by close of trades," a dealer at a UK-based bank said. April premiums quoted 10/12 paise (13/14 paise), May at 34/26 paise (37/39 paise) and June at 57/59 paise (61/54 paise). In the far forwards, November premiums closed at 195/198 paise (200/203 paise), December at 223/225 paise (228/231 paise) and January at 252/254 paise (256/259 paise).

FORECAST: The six-month annualised forward cover seen at 6.80-7 per cent levels on Thursday.

Gilts

Bond prices across all maturities firmed up on Wednesday. The 12.50 per cent 2004 was dealt sharply higher at Rs 104-104.05 (Rs 103.90). The 11.40 per cent 2000 went higher at Rs 100.90-100.92 (Rs 100.86) while the 11.55 per cent2001 was dealt at Rs 100.05-100.10 (101.05).

"Easier call rates and infusion of liquidity saw bond prices rally today. The 11.99 per cent 2009 issued on Tuesday went at a premium at Rs 100.14. It was dealt up to Rs 100.22 levels", bond dealers said. Few trades were, however, seen in the 12.29 per cent 2010.

Interest was also seen in the 11.15 per cent 2002 at Rs 101.96-102.00 as also the 11.99 per cent 2009 at Rs 100.08-100.12. The 91-day T-bill maturing on the 12 of June went at a yield-to-maturity of 8.55 per cent with the 364-day T-bill at a YTM of 9.95 per cent.

FORECAST: Bond prices may fall a bit on Thursday.