The call-money market remained closed on Wednesday on account of the Reserve Bank's half-yearly book closure. Dealers said that call rates could tighten on Thursday with just a day remaining to provide for cash reserve ratio (CRR) requirements ahead of Reporting Friday. "Most of the bigger players might have covered their positions. But those left short may find themselves in a spot of bother. Call rates could firm up to 8.35 per cent levels if traditional lenders keep away on Thursday morning", a dealer with a European bank said. On Tuesday, call rates had closed at 7.90-8 per cent levels after going to a intra-day high of 8.10 per cent. Potential outflows of Rs 2,500 crore will hit the system early next fortnight if the Reserve Bank's re-issuance of the the 11.90 per cent 2007 on July 1 sails through, and nullify inflows of nearly Rs 2,800 crore due this fortnight by way of coupon payments on dated securities, and redemptions of T-bills.

FORECAST: Call rates may firm up to 8.35per cent on Thursday.

Spot Dollar

Dull trades were witnessed in the forex markets on Wednesday, and the rupee held firm against the dollar. Opening the day at 43.36/37 from its overnight close at 43.3625/37, poor corporate interest for dollars saw the rupee hold firm. "The rupee hovered at 43.3550/36 till mid-session. Banks and corporates stayed away from the market on account of the Reserve Bank's half-yearly book closure. Trading sentiment was also affected by the fact that call-money market was closed", dealers said. By close of trades, the rupee was seen at 43.3550/3650. No cash deals were struck today. Tom/spot quoted at 0.25/0.50 paise. The Reserve Bank maintained its reference rate for the dollar at 43.36. Meanwhile, the rupee quoted at 44.72 (44.70) against the Euro in opening trades, went to an intra-day low of 44.84 (44.95) before closing at 44.66 (44.92).

FORECAST: Rupee seen at 43.38 levels on Thursday.

Forward Premiums

Forward premiums eased by one to two paise onWednesday. The six-month annualised forward cover ruled unchanged at 5.35 per cent. "There were hardly any trades with the Reserve Bank closed for its half-yearly book closure. There was no corporate interest for forward dollars. The spot-rupee was also stable", dealers said. August dollars quoted unchanged at 34/37 paise (36/38 paise) with September at 54/55 paise (56/58 paise). February premiums were seen at 165/167 paise (168/170 paise), March at 191/192 paise (194/196 paise) and April at 215/217 paise (210/222 paise). "Forward premiumm have eased over the last couple of days. On Thursday, premiums could go higher in intra-day trades if call rates goes to 8.50 per cent levels", dealers said.

FORECAST: Six-month annualised forward may inch up intra day to 5.40 per cent levels on Thursday.

Gilts

Gilts prices recovered from Tuesday's levels, but trades were dull. Bond prices fell on Tuesday after the Reserve Bank's announced that it will re-issue the 11.90 per cent 2007 for Rs 2,500 croreon July 1. Little interest was seen in the 12.32 per cent 2011 paper (Rs 101.88); 12.40 per cent 2013 (Rs 106.55) or the 11.98 per cent 2004 (Rs 102.30). The 11.99 per cent 2009 was dealt at Rs 100.70-100.80 (Rs 100.65). "Trades were affected on account of the call market being closed. The Reserve Bank's half yearly book closure saw trades being muted", a dealer with a US-based bank said. The 13.05 per cent 2007 was seen going at Rs 101.60 levels (Rs 101.40) with the 11.40 per cent 2000 paper unchanged at Rs 100.71 (Rs 100.71 levels) and 11.75 per cent 2001 paper at Rs 101.45 (Rs 101.40).

FORECAST: Bond prices seen holding current levels on Thursday, but call rates hold key.