Inter-bank rates ruled softer at 8.05 per cent levels on Wednesday. Opening the day at 8-8.10 per cent, call rates quoted easy despite a potential outflow of Rs 5,000 crore on account of the twin-bond auction of the 12.32 per cent 2011 and the 12.40 per cent 2013 held today, looming large. "Payout is on Thursday, but call rates did not reflect an impending tightening on its eve. Most banks have covered their positions ahead of Reporting Friday", a dealer with a Gulf-based bank said. Most of the deals were struck between 8.05-8.10 levels. At close, call rates were seen at 8-8.05 per cent. There was a small inflow of Rs 67 crore as a result of interest payments on the 13.40 per cent 2002. "Dollar buying interest also waned today, and this helped call rates rule lower", a dealer with a primary dealership said. The Reserve Bank said it will hold a four-day six per cent fixed rate rate repos June 17. Elsewhere, the National Stock Exchange's overnight Mibid and Mibor were pegged at 8.20 per cent(8.03 per cent) and 8.14 per cent (8.35 per cent) with the 14-day ones at 8.46 per cent (8.51 per cent) and 9.14 per cent (9.21 per cent).

FORECAST: Call rates seen at 8-10-8.30 per cent levels on Thursday.

Spot dollar

The rupee rallied by 19 paise on Wednesday to close at 43.14/16. Opening the day at 43.28/31, slightly stronger from its overnight close at 43.32/33, the rupee gained as corporate interest for dollars waned. "US president, Bill Clinton's statement that Pakistan must stop its infilteration was seen as defusing the tension on the border. Most corporates with exposure had covered their positions on Tuesday, but after Clinton's statement, residual corporate also dipped. The State Bank of India was seen selling dollars, and may other banks cut long-dollar positions", a dealer with a US-based bank said. The State Bank is said to have sold dollars at 43.28 and at 43.17 levels. The rupee quoted at 43.18 levels for sometime before closing rallying to finish at 43.14/16. Cash/spotclosed at 0.75/1 paise (0.50/0.75 paise) with cash/tom and tom/spot going at 0.25/0.50 paise (0.25/0.50 paise). The Reserve Bank fixed its reference rate for the dollar at 43.19 against its previous fix of Rs 43.18. Elsewhere, the rupee opened the day at 45.13 (45.18) against the euro, went to an intra-day low of 45.18 (45.06) to close at 44.56 (45.04).

FORECAST: Rupee seen between 43.10 and 43.20 on Thursday.

Forward premiums

Forward premiums went softer on Wednesday in line with a stronger spot-rupee. The six-month annualised forward cover closed at 5.15 per cent (5.55 per cent). "Premiums fell across the board. As the spot rupee gained, exporters started receiving. There was also some inter-bank receiving. The State Bank's spot-dollar sales was seen by many that a fresh round of weakness in the rupee may not be on now. Import-covering was quite low today, and most of them appeared to have done so on Tuesday itself", a dealer with a brokerage said. August dollars closed at 39/41 paise(42/48 paise) with September at 62/64 paise (67/68 paise) while in the far terms, January dollars went at 145/148 paise (153/155 paise) and February at 171/174 paise (179/182 paise).

FORECAST: Six-month annualised premium seen between 5.10 and 5.20 per cent on Thursday.

Gilts

Bond prices held steady on Wednesday. The 12.32 per cent 2011 held steady at Rs 102.30 levels with the 12.40 per cent 2013 also going likewise at Rs 101.82-101.84. "Trades did not reflect the fact that a twin-bond auction of the 12.32 per cent 2011 and the 12.40 per cent 2013 is being held today. Most players were holding on to the results to come through. There is a feeling that there could be a partial devolvement to the extent of Rs 1,000 crore or so", a bond dealer with a primary dealership said. The 11.99 per cent 2009 was traded at Rs 101.28-101.30 (Rs 101.25) while the 12.50 per cent 2004 quoted at Rs 104.25-104.28 levels (Rs 104.20). "Intra-day price movement was only to the extent of 2 to 4 paise. Bondprices held firm as the rupee also recovered", a dealer with a US-based bank said. The 91-day T-bill maturing on the August 28 went at a yeild-to-maturity (YTM) of 8.80 per cent with the 182-day T-bill maturing on November 25 at 9.75 per cent.

FORECAST: Bond prices seen holding current levels on Thursday, but Kargil will influence prices.

--Raghu Mohan