Overnight rates ruled rangebound on Friday with most of the deals being struck at 8.25-8.30 per cent levels. Opening the day at 8.30-8.40 per cent, higher from its last close at 8.25-8.30 per cent, call rates did not go higher as there was no additional demand even after the second clearing of cheques. "Quite a few banks and primary dealers were seen borrowing to repay the refinance availed of. This is likely to keep call rates above 8 per cent levels during this Reporting Fortnight", dealers said. At close, call rates were seen softer at 8.25 per cent thereabouts. "There is enough liquidity in the system. Inflows of nearly Rs 2,340 crore are expected this fortnight by way of interest payments and redemption of T-bills this fortnight", a research analyst said. There was no response to Reserve Bank's three-day 6 per cent fixed-rate repos. The National Stock Exchange pegged its overnight Mibid and Mibor at 8.23 per cent (8.21 per cent) and 8.34 per cent (8.31 per cent) with the fortnightlyat 8.40 per cent (8.42 per cent) and 9.02 per cent (8.99 per cent) respectively.

FORECAST: Call rates seen at 8.25-8.30 per cent levels on Saturday.

Spot dollar

The rupee rallied to close by 10 paise at 43.31/31 on Friday. Opening the day at 43.40/42, little changed from its overnight close at 43.4050/4250, the rupee held 43.38/39 levels till mid-session. "There was dollar buying interest from corporates at 43.38 levels though the amounts bid were small. A few state-run banks were also seen buying dollars", a dealer with a European bank said. News of the Pakistan army exhorting infiltrators to pull back from the Indian side of the LoC saw the rupee gain to 43.29/30 levels as banks unwound long dollar positions. At close, the rupee was seen at 43.31/32. Cash/spot quoted at 1.50/2.75 paise (1.50/1.75 paise), cash/tom unchanged at 1/1.50 paise (0.25/0.50 paise) with tom/spot at 0.25/0.50 paise (1.25/1.37 paise). The Reserve Bank pegged its reference rate for the dollar at 43.39 from itsprevious 43.36. Elsewhere, the rupee quoted at 44.00 (44.11) against the Euro in opening trades, went to an intra-day low of 44.44 (44.42) before closing at 44.17 (44.26).

FORECAST: Rupee may gain to 43.25 levels on Monday.

Forward premiums

Forward premiums closed a tad softer on Thursday. The six-month annualised forward cover ruled at 4.74 per cent (4.77 per cent). "Premiums would ease more, but there is hardly any receiving interest. If the spot-rupee were to stablise, exporters may start receiving", a dealer with a European bank said. August dollars quoted unchanged at 40/41 paise (42/43 paise) with September at 50/52 (53/54 paise). February premiums were seen at 136/138 paise (139/140 paise), March at 157/159 paise (159/161 paise) and April at 177/180 paise (181/182 paise). "If the spot rupee were to gain to 43.25 levels on Monday, there could be some receiving. Importers may also start paying if premiums were to soften", a dealer with a brokerage said.

FORECAST: Six-monthannualised forward seen at 4.60-4.70 per cent levels on Monday.

Gilts

Dull trades were seen in the bond market on Friday. The 11.90 per cent 2007 was dealt at unchanged at Rs 101.06/07; 11.68 per cent 2006 between Rs 100.68 and Rs 100.73; 11.98 per cent 2004 at Rs 102.60 levels (Rs 102.62) with the 11.50 per cent 2004 at Rs 100.74 (Rs 100.73 levels). "Bond prices held steady today. Trades continue to be subdued because of Kargil", a dealer with a primary dealership said. The 13.05 per cent 2000 was dealt higher at Rs 100.75 (Rs 106.68); 11.40 per cent 2000 at Rs 100.83 (Rs 100.81) with the 11.68 per cent 2002 and the 11.55 per cent 2001 quoting unchanged at Rs 101.25 and Rs 101.62 respectively. "Bond prices may perk up on Monday if the situation on the border improves over the weekend", dealers said. The 91-day T-bill maturing on October 25 was seen going at a yeild-to-maturity of 9.15 per cent; the 182-day T-bill maturing on December 9 at a YTM of 10.05 per cent; and the 364-day T-bill maturingon May 5 at a YTM of 10.10 per cent.

FORECAST: Bond prices may firm up by 2 to 3 paise on Saturday.