Overnight rates softened to an intra-day low of 7 per cent on Reporting Friday, but closed firmer at 8-8.10 per cent. Opening the day at 7-7.10 per cent levels, lower from its last close at 8-8.10 per cent, call rates eased to 7 per cent levels on reduced demand for funds on account of Reporting Friday. In the second session, call rates perked to above 8 per cent levels. "A few banks were seen borrowing to provide for some high-value cheque clearances. Most of the deals were, however, done between 7 and 7.10 per cent levels", a dealer with a Gulf-based bank said. No application was received at the Reserve Bank's four-day 6 per cent fixed-rate repos held today. The Reserve Bank will hold a four-day 6 fixed-rate repos on Saturday.

Elsewhere, the National Stock Exchange's overnight Mibid and Mibor rates were pegged at 7.06 per cent (7.98 per cent) and 7.60 per cent (8.13 per cent) with the 14-day ones at 8.41 per cent (8.55 per cent) and 9.13 per cent (9.21 per cent)respectively.

FORECAST: Call rates seen between 8.30 per cent and 8.50 per cent levels on Saturday.

Spot Dollar

The rupee held firm against the dollar on Friday, and recovered from its previous day's weakness when it touched an intra-day low of 42.78. Opening the day at 42.75/76, unchanged from its overnight close, the rupee hovered at those levels till noon with supplies matching demand. "The market witnessed moderate activity. Corporate demand for dollars was more than met by inflows. The rupee staged a small rally against the dollar by close on fresh corporate dollar sales. Continued foreign institutional investors inflow has also helped keep the rupee stable", dealers said. At close of trades, the rupee was seen at 42.7325/74. Cash/spot went at 0.25/0.50 paise (1.25/1.50 paise), cash/tom at 1.50/1.75 paise (0.25/0.50 paise) with tom/spot at 1/1.25 paise (0.75/1 paise).

The Reserve Bank maintained its reference rate for the dollar at 42.75 as against its previous fix at 42.76. The Euro,meanwhile, opened at 45.26 (45.48) against the rupee, went to an intra-day high of 45.39 (45.66) before closing at 45.22 (45.49).

FORECAST: Rupee seen holding 42.74/75 levels on Monday.

Forward Premiums

Forward premiums softened on Friday riding on lower call rates, and a firm spot rupee. "Forward premiums eased marginally on good receiving and nominal import booking. Near forwards premiums drifted lower by 1 to 2 paise while far forwards dropped by 5 to 6 paise", dealers said. The six-month annualised forward cover went a tad lower at 5.25 per cent (5.37 per cent). "Paying interest was on the weaker side as quite a few corporates covered their positions on Thursday. Interest for forward dollars was relatively weak today", a dealer with a brokerage said. In the near terms, June dollars went at 16/18 paise (17/19 paise) with July at 33/34 paise (34/35 paise) and August at 53/54 paise (54/56 paise). "Premiums opened lower today, and continued to soften in intra-day trades", a dealer with a US-basedbank said.

In the far fowards, the softening in premiums was more pronounced with December dollars finishing at 136/137 paise (141/142 paise) with January at 164/165 paise (168/171 paise).

FORECAST: Six-month annualised forward cover seen at 5.20-5.25 per cent levels on Monday.

Gilts

Medium- and long-term bond prices shot up in Friday triggered off by the Centre's private placement of the re-issued 12.60 per cent 2018 for Rs 4,100 crore at a cut-off price of Rs 101.30 with the Reserve Bank. "The market expects liquidity with call rates expected to hold 8.20-8.40 per cent levels next week. The private-placement has taken the pressure off the market. The key now is the Reserve Bank's price list when its does the next OMO", dealers said. The 12.40 per cent 2013 was dealt up to Rs 101.52-101.54 (Rs 101.38-101.40); 12.29 per cent 2010 at Rs 102.48-102.50 (Rs 102.26-102.28); 11.32 per cent 2011 at Rs 102.16-102.18 (Rs 101.96-101.98); and the 11.68 per cent 2006 at Rs Rs 101.08-101.10 (Rs 101.00levels). The 13.05 per cent 2007 was dealt at Rs 101.35 levels (Rs 101.23.101.25) with the 12.25 per cent 2008 at Rs 102.97 levels (Rs 102.86 thereabouts).

Short-dated bond prices were steadier with the 12.50 per cent 2004 quoting at Rs 104.43-104.44 (Rs 104.43-101.47) with the 11.40 per cent 2000 holding Rs 100.80-101.91 levels.

FORECAST: Long-dated bond prices seen stable on Saturday.