Call rates eased to an intra-day low of 7.75 per cent on Thursday. Opening the day at 7.75-7.80 per cent, unchanged from its last close, call rates ruled in the 7.75-8 per cent band throughout the day. "Demand for funds dropped ahead of Reporting Friday. However, call rates firmed up slightly towards close of trades on account of late session covering by some banks", dealers said, adding that most of the deals were struck at 7.90 per cent levels. The DFHI extended market support to the extent of Rs 1,500 crore. The RBI did not receive any application for its four-day 6 per cent fixed rate repos held today with call rates ruling well above the repo rate even on a Reporting Friday. The RBI is to hold a four-day 6 per cent fixed rate repos on June 4. The NSE's overnight Mibid and Mibor were quoted at 7.75 per cent (7.63 per cent) and 7.94 per cent (7.93 per cent) with the 14-day ones at 8.20 per cent (8.31 per cent) and 8.90 per cent (8.90 per cent).

FORECAST: Call rates seen at7.50-7.75 per cent levels on Friday.

Spot dollar

Dull trades were witnessed in the spot rupee segment on Thursday. Opening the day at 42.90/91 from its overnight close at 42.93/94, the rupee held firm at these levels for most of the day. The State Bank of India reportedly bought dollars, and the rupee was seen holding 42.9275/9375 till mid-session.

"Corporate interest for dollar is extremely poor. Border tension has been discounted by the market. The rupee will hold firm against the dollar until fresh market making news hits the market", a dealer at a Gulf-based bank said. At close, the rupee was seen at 42.92/93. Cash/spot quoted at 1.50/1.75 paise with cash/tom 1.25/1.50 paise. The Reserve Bank of India pegged its reference rate for the dollar at 42.93 as against its previous fix at 42.94. Meanwhile, the rupee opened at 44.48 (44.84) against the euro, went to an intra-day low of 44.62 (44.91) to finally close at 44.13 (44.48).

FORECAST: Rupee seen at 42.92-42.94 levels onFriday.

Forward premiums

Forward premiums went a tad softer on Thursday. "Trades in the forward dollar market remained dull and premiums eased marginally on scattered receiving. Premiums drifted lower by 1 to 2 paise", a dealer at a Gulf-based bank said. The six-month annualised forward cover closed at 5.48 per cent (5.45 per cent). In the near terms, June premiums closed at 12/13 paise (14/15 paise), July at 30/31 paise (32/34 paise) with August quoting at 51/52 paise (52/54 paise).

"Trades are poor. Corporates interest for forward dollars seemed to have been exhausted last week when the spot-rupee came under pressure on account of the tension on the border", a dealer at a brokerage said.

February dollars closed at 192/193 paise (191/194 paise) with March at 218/221 paise (219/221 paise).

FORECAST: Six-month annualised premium seen between 5.40-5.43 per cent levels on Friday.

Gilts

Bond prices fluctuated in a 5 paise band on Thursday, but closed almost at their overnightclosing levels. The 11.75 per cent 2006 went unchanged at Rs 102.38 with the 12.25 per cent 2008 also doing likewise at Rs 103.36. "The border tension has put a cap on any sharp appreciation in bond prices. Players have turned cautious and few are building up positions. Bond prices were exteremely rangebound today, and across all maturities", a bond dealer at a US-based bank said. The 12.40 per cent 2011 was dealt from Rs 101.97 up to Rs 102.00 levels (Rs 101.95-Rs 101.98). The 12.29 per cent 2010 went unchanged at Rs 102.88 with the 11.99 per cent 2013 at Rs 101.62 levels (Rs 101.60 levels).

FORECAST: Bond prices will hold current levels on Friday.

--Compiled by Raghu Mohan