Overnight rates went to an intra-day high of 8.30 per cent on Tuesday before closing softer 8-8.25 per cent. Opening the day at 8.20-8.30 per cent, almost unchanged from its previous close, call rates ruled at these levels for most of the day. "Trades were dull today. Liquidity is expected to ease with interest payments of nearly Rs 1,300 crore on dated securities over the next two weeks", dealers said. Interest payments of nearly Rs 700 crore are due on the 13.32 per cent 2011 and 12.29 per cent 2010. "There is also a strong feeling that a cash reserve ratio (CRR) cut is around the corner", a dealer with a US-based bank said. Most of the deals today were struck at 8.20-8.25 per cent levels. Elsewhere, the National Stock Exchange fixed its overnight Mibid and Mibor at 8.15 per cent (8.57 per cent) and 8.29 per cent (8.75 per cent) with the fortnightly one at 8.51 per cent (8.60 per cent) and 9.03 per cent (9.10 per cent).

FORECAST: Call rates seen at 8.15-8.25 per cent levels onWednesday.

Spot dollar

The rupee closed a shade lower against the dollar at 43.21/22 on Tuesday. Opening the day at 43.19/20 from its overnight close at 43.20/21, the rupee gained to 43.1850 levels by noon on good dollar supplies. In later day trades, the rupee was seen lower at 43.1975/2075 levels as importer-led interest for dollars came in. "The rupee went lower as the expected dollar flows did not come through. There was also dollar demand from state-run banks. On the whole, however, the rupee was stable". a dealer with a European bank said. Cash/spot and cash/tom quoted unchanged at 0.75/1 paise and 0.3750/0.50 paise respectively with tom/spot at 0.3750/0.50 paise (0.50/0.6250 paise). The Reserve Bank fixed its reference rate for the dollar at 43.20 as against the previous day's 43.22. Meanwhile, the euro opened at 44.52 (43.96) against the rupee, went to a high of 44.99 (43.97) before closing at 44.95 (43.79).

FORECAST: Rupee seen holding 43.20/21 levels on Wednesday.

Forwardpremiums

Forward premiums continued their softening trend on Tuesday. The one-month annualised forward cover was seen at 3.76 per cent (3.55 per cent), three-months at 3.88 per cent (3.99 per cent) and six-months at 4.30 per cent (4.40 per cent). "There was good amount of receiving today. With premiums softening and a firm spot-rupee 43.20 levels, quite a few exporters were seen receiving. There was also importer-led demand for spot-dollars today", a dealer with a European bank said. There was hardly any movement in near-term forwards. August and September dollars were seen quoted unchanged at 18/19 paise and 32/33 paise respectively. In the far-terms, February premiums quoted at at 111/114 paise (113/115 paise), March 128/130 paise (131/133 paise) and April at 148/150 paise (151/153 paise).

FORECAST: Six-month annualised forward cover seen at 4.30 per cent levels on Wednesday.

Gilts

Bond prices were bouyant on Tuesday. The 12.40 per cent 2013 stock was dealt at Rs 101.91 (Rs 101.88)while the 11.90 per cent 2007 stock was dealt at Rs 101.64 (Rs 101.51). "Bond prices on these two securities went still higher by 5 to 6 paise. This was the case with most medium- to long-dated bond, but profit taking saw bond prices close softer", a dealer with a primary dealership said. The 11.32 per cent 2011 was seen dealt higher at Rs 102.23 (Rs 102.20). "Sentiment is bullish on rumours of a cut in the bank rate. Finance Minister, Yashwant Sinha's, statement last week that he hoped the Reserve Bank would take account of low inflation levels while determining interest rate moves has boosted trading sentiment", dealers said.

FORECAST: Bond prices seen rallying by 5 to 7 paise on Wednesday.