Overnight rates closed at 7.90-8 per cent levels on Thursday. Opening the day at 8-8.10 per cent from its Tuesday's close at 8 per cent, call rates held these levels for most of the day. "There is enough liquidity in the system. Banks appear to have provided for cash reserve ratio requirements ahead of the reporting Friday", dealers said, adding: "There was ample supply of funds. Borrowers were few on the penaltimate day before Reporting Friday". The much anticipated call tightening to 8.35 per cent levels or so never came about today, but dealers said that post-payout on the re-issued 11.90 per cent 2007 on July 1 for Rs 2,500 crore, call rates could tighten. "It all depends on the response to the auction", a dealer with a European bank said. Most of the deals today were struck at 8.05 per cent levels. At close, call rates were seen at 7.90-8 per cent. The RBI did not receive any response to fixed-rate repos held today. Elsewhere, the NSE pegged its overnight Mibid and Mibor rates at 7.99per cent and 8.08 per cent with the fortnightly quotes at 8.44 per cent and 9.08 per cent.

FORECAST: Call rates seen between 7.90 per cent and 8.15 per cent on Friday.

Spot dollar

The rupee held rock steady on poor corporate interest for dollars, and moved in a fine 2 paise band. Opening the day at 43.3650/3750 from its last close at 43.3550/3650, the rupee held these levels in early trades. Slight dollar demand by mid-session saw rupee go to an intra-day low of 43.3850 before closing at 43.3750/3850. "Corporate interest for dollars was poor. So was inter-bank interest. The State Bank of India did not trade actively", a dealer with a brokerage said. Cash/tom quoted at 0.25/0.50 paise, cash/spot at 2/2.25 paise with tom/spot at 1.50/1.75 paise (0.25/0.50 paise). The Reserve Bank pegged its reference rate for the dollar at 43.38 from its previous 43.26. Elsewhere, the rupee quoted at 44.86 (44.72) against the Euro in opening trades, went to an intra-day low of 45.06 (44.84) before closing at44.85 (44.66).

FORECAST: Rupee seen holding 43.37 levels on Friday.

Forward premiums

Forward premiums eased across the board on Thursday as the spot-rupee held firm. The six-month annualised forward cover ruled unchanged at 5.25 per cent (5.35 per cent). "Typical month-end demand for dollars is not being seen. Corporates appear to have covered their exposures immediately after the Kargil conflict began", a dealer with a European bank said, adding: "A firm spot-rupee, and Reserve Bank governor, Bimal Jalan's statement last week that a close watch will be kept on the rupee has calmed the markets. There is also little by way of market moving news". August dollars quoted unchanged at 31/32 paise (34/37 paise) with September at 50/52 paise (54/55 paise). February premiums were seen at 161/162 paise (165/167 paise), March at 185/187 paise (191/192 paise) and April at 210/211 paise (215/217 paise).

FORECAST: Six-month annualised forward seen at 5.20-5.25 per cent levels onFriday.

Gilts

Gilts prices fell by one paise in intra-day trades on Thurday. The 12.32 per cent 2011 paper was seen at Rs 101.78-101.80 (Rs 101.88); 12.40 per cent 2013 at Rs 101.40 levels (Rs 101.55) with the 11.98 per cent 2004 holding steady at Rs 102.30. "All eyes are on the re-issuance of the 11.90 per cent 2007 for Rs 2,500 crore on today. The cut-off price is of utmost interest rather that the auction's success. There is enough liquidity in the system, and the auction will sail through", a dealer with a primary dealership said.

The 11.75 per cent stock 2006 was quoted between Rs 100.90 and Rs 101.00. The 11.99 per cent 2009 was seen holding at Rs 100.70-100.80 levels while the 13.05 per cent 2007 was dealt at Rs 106.50 (Rs 101.60 levels). The 11.75 per cent 2001 paper quoted at Rs 101.48 levels (Rs 101.45). The 182-day T-bill maturing on 9 December this year went at a yeild-to-maturity (YTM) of 10.15 per cent with the YTM in the 364-day T-bill maturing on the 5 of May 2000 at 10.25 percent.

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