Call rates closed softer at 8.05-8.10 per cent on Wednesday. Opening the day at 8-8.20 per cent, almost unchanged from its last close, call rates were rangebound between 8.10 per cent and 8.15 per cent for most of the day.

"There was enough liquidity and demand for funds were moderate", dealers said, adding: "Trades were brisk in early part of the day". In later day trades, call rates drifted lower 8.05 per cent levels. Most of the deals were struck at 8.10 per cent levels. "Call rates are seen going lower as 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) or bank rate cut may be on", a dealer with a European bank said. The Discount & Finance House of India extended market support to the extent of Rs 2,000 crore. Elsewhere, the National Stock Exchange fixed its overnight Mibid and Mibor at 8.05 per cent (8.15 per cent) and 8.19 per cent (8.29 per cent) with thefortnightly one at 8.51 per cent (8.51 per cent) and 9.04 per cent (9.03 per cent).

FORECAST: Call rates seen at 7.95-8.10 per cent levels on Thursday.

Spot Dollar

The rupee went to an intra-day low of 43.26/27 on Wednesday. Opening the day at 43.22/23, weaker from its overnight close at 43.19/20, the rupee went lower to 43.255/265 in noon trades.

"Concerns over Kashmir with reports of Pakistan make a renewed bid to recapture Tiger Hills, and agressive quotes for the dollar by the State Bank of India saw the rupee weaken to its intra-day low", a dealer with a US-based bank said. Later, profit taking and unwinding of long dollar positions helped the rupee recover to close at 43.26/27. Cash/spot and cash/tom quoted unchanged at 0.75/1 paise and 0.3750/0.50 paise respectively with tom/spot also likewise at 0.3750/0.50 paise. The Reserve Bank fixed its reference rate for the dollar at 43.26 as against the previous day's 43.20. Meanwhile, the euro opened at 44.88 (44.52) against the rupee,went to a high of 44.88 (44.99) before closing at 45.23 (44.95).

FORECAST: Rupee seen at 43.24/26 on Thursday.

Forward Premiums

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 4.39 per cent (4.30 per cent). "There was hardly any receiving today. Demand for dollar came from importers who are paying given current premium levels", a dealer with a European bank said, adding: "The rupee is seen holding current levels until the general elections. Trades in the forward segment continue to be dull". August and September dollars held steady at 17/18 paise 32/33 paise respectively. In the far-terms, February premiums quoted at 112/114 paise (111/114 paise), March 130/132 paise (127/130 paise) and April at 149/151 paise (148/150 paise).

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

Gilts

Bond prices rose by five to six paise on Wednesday. The 12.40 per cent 2013 stock was dealt at Rs 101.99 (Rs 101.91) with the 11.90 per cent 2007 stock at Rs 101.69 (Rs 101.64). "Talk of an impending cash reserve ratio (CRR) or bank rate cut bouyed prices. Prices may have rallied had it not been for a weaker spot-rupee at 43.26/27 levels today", dealers said. The 11.32 per cent 2011 was seen dealt higher at Rs 102.27 (Rs 102.23).

"Price movements were not significant today. A few trades appear to be building positions. Bonds up to 2006 were traded actively. The sentiment is clearly bullish," bond dealer said, adding: "Talks that there could be a cut in the cash reserve ratio (CRR) or bank rate has given trades a boost".

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