Overnight rates ruled stable in quite trades on Wednesday. Opening the day at 7.90-8 per cent, almost unchanged from its previous close, call rates ruled firm at these levels throughout the day in largely dull trades. "Slack demand and adequate liquidity saw call rates close near to their opening quotes", a dealer with a Gulf-based bank said. Most of the deals were struck at around 7.98 per cent thereabouts, dealers said. "Inflows from the redemption of 13.70 per cent 1999 on Monday have aided liquidity in the inter-bank markets, and kept overnight rates easy", dealers said. The Reserve Bank did not receive any bid at its three-day six per cent fixed-rate repos held here today. The National Stock Exchange's overnight Mibid and Mibor quoted at 7.93 per cent (7.93 per cent) and 8.04 per cent (8.05 per cent) with the 14-day ones at 8.25 per cent (8.24 per cent) and 8.86 per cent (8.92 per cent).

FORECAST: Call rates seen at 7.85-8.10 per cent levels on Thursday.

SpotDollar

The rupee closed two paise lower against the dollar on Wednesday at 43.05/07 in moderate trades. Opening the day at 43.01/03 from its last close at 43.03/04, the rupee hovered at these levels till about noon. "Continued purchases of dollars by local corporates, banks, especially the State Bank of India, saw the rupee slide to 43.04/05. In later day trades, the rupee went to a intra-day low of 43.06/07 before closing at 43.05/07", a dealers with a European bank said. Cash/spot quoted unchanged at 0.75/1 paise with both cash/tom and tom/spot going at 0.25/0.50 paise. "It is deputy governor, Jagdish Capoor's statement that the central bank would not stand in the way if the rupee went lower than 43 that has caused the current weakness. But corporates appear not to be unduly worried", dealers said adding that most expected the Kargil crisis to blow over soon. Elsewhere, the Reserve Bank of India pegged its reference rate for the dollar at 43.05 as against its previous fix at 43.98. Meanwhile, therupee opened at 44.19 (44.46) against the euro, went to an intra-day low of 44.73 (44.49) to finally close at 44.90 (44.25).

FORECAST: Rupee seen between 43.03 and 43.10 levels on Thursday.

Forward Premiums

Forward premiums continued their softening trend Wednesday. The benchmark six-month annualised forward cover closed at 5.25 per cent (5.35 per cent). "There was a bit of receiving. Few corporates are paying expecting the spot-rupee to rule in 43 to 43.12 band for some time. Importers are, therefore, comfortable and doing very little hedging. Forwards are softening despite a dip in the spot rupee because the movement is caused largely by inter-bank play", dealers said. In the near terms, June premiums closed at 8/9 paise (9/11 paise) with July at 24/26 paise (24/27 paise) while in the far terms, February dollars closed at 176/179 paise (179/182 paise) with March at 201/204 paise (205/208 paise). "Reserve Bank deputy governor, Jagdish Cappor's statement that the central bank will notstand in the way if the rupee crosses 43 is seen as a sign of confidence...that the Reserve Bank is clear that the rupee will hold its own, albiet the slight weakening", dealers said.

FORECAST: Six-month annualised premium seen between 5.25-35 per cent levels on Thursday.

Gilts

Long-term bond prices posted small gains of 10-16 paise on Wednesday. Prices went up with the Reserve Bank taking the 12.60 per cent 2018 of the sale window. Prices movements were erratic towards close of trades", a dealer with a primary dealership said. The 12.60 per cent 2018 had been put on the Reserve Bank window at 103.40, and once off, gained to Rs 105.50 (Rs 100.36-Rs 100.39). The 11.75 per cent 2006 was dealt up to Rs 102.48 levels (102.45) with the 12.40 per cent 2013 going at Rs 102.10 (Rs 102.03). The 11.99 per cent 2009 was seen at Rs 101.53 levels (Rs 101.50). The medium-term 12.50 per cent 2004 went at Rs 104-47 (Rs 104.44) with the short-dated 11.68 per cent 2002 at Rs 101.66 and Rs 101.69. The 91-dayT-bill maturing on August 28 went at a yeild-to-maturity (YTM) between 8.80 per cent and 8.60 per cent; 182-day maturing on the November 25 went at a YTM between 9.85 per cent and 9.55 per cent; and the 364-day T-bill maturing on May 5, 2000 going at a YTM between 10.15 per cent and 9.95 per cent. Elsewhere, a Reserve Bank release said that put the 11.98 per cent 2004 will be put on the sale window at Rs 102.85, effective from June 10.

FORECAST: Long-bond prices seen gaining by 1-2 paise on Thursday.