Call rates went to an intra-day high of 8.40 per cent on Tuesday, but ruled from its Monday's range between 8.4 per cent and 8.75 per cent. Opening the day at 8.28-8.40 per cent from its overnight close at 8.25-8.5 per cent, call rates were sought to be pushed higher in early trades by a few state-run banks. "Few trades were done above 8.3 per cent levels though, and call rates eased by close of trades to 8.1-8.15 per cent. Inflows in the second half of the current fortnight include Rs 474.26 crore by way of interest payments on the 11.75 per cent 2001 on 25 August and Rs 138.5 on the 13.85 per cent 2006 on the next day. "A large amount of refinance has been drawn by banks and primary dealers. Demand for repaying these borrowings will harden the rates the moment call rates fall to below eight per cent" dealers said. NSE pegged its overnight Mibid and Mibor at 8.05 per cent (8.70 per cent) and 8.19 per cent (8.91 per cent) with the fortnightly one at 8.88 per cent (8.91 per cent) and 9.35per cent (9.57 per cent).

FORECAST: Call rates seen at 8.40 per cent levels on Wednesday.

SPOT DOLLAR

The rupee finished stronger at 43.51/52 on Tuesday. Opening the day at 43.5051/5052 from its previous close at 43.51/52, the rupee held 43.5025/5150 till noon trades. "Corporate demand for dollars continues to persist, but Reserve Bank governor, Bimal Jalan's statement on Monday that the central bank was prepared to intervene directly or sell dollars through the State Bank in order to augment dollar supplies has allayed all fears of a slide in the rupee", a dealer with a brokerage said. SBI was offering dollars at 43.5150 levels, but later raised the offer to 43.52. "This (43.52) appears to be the lower ceiling for the rupee at the moment", a dealer said. Cash/spot quoted 0.50/0.75 paise (0.75/1 paise), cash/tom at 0.25/0.50 paise (0.3750/0.50 paise) with tom/spot also at 0.25/0.50 paise (0.350/0.50 paise). The Reserve Bank pegged its reference rate for the dollar at 43.51 as against itprevious 43.55. The euro opened at 45.65 (46.45) against the rupee, went to a high of 45.81 (46.46) before closing at 45.70 (45.24).

FORECAST: Rupee seen between 43.5150-43.5250 levels on Wednesday.

FORWARD PREMIUMS

Forward premiums went a shade higher on Tuesday after the Reserve Bankof India's decision to re-issue the 11.99 per cent 2009 for Rs 2,500 crore on August 27, but came of earlier highs by close of trades. The six-month annualised forward cover finished at 4.77 per cent. January dollars quoted 89/90 per cent (90/92 paise) with February at 105/107 paise (106/108 paise). "Reserve Bank governor, Bimal Jalan's statement that the central bank was prepared to intervene directly or sell dollars through the State Bank of India saw premiums ease off on Monday, but the auction of the 11.99 per cent 2009 is seen pushing call rates up and impacting on forward premiums", a dealer with a British bank said, adding: "A few state-run banks were seen receiving in the forwards. This will infuseliquidity ahead of the bond auction on Friday".

FORECAST: Six-month annualised forward cover at 4.8 per cent on Wednesday.

GILTS

Bond prices fell on Tuesday. The 12.50 per cent 2004 was dealt between at Rs 105.44 and Rs 105.46 (Rs 105.49 and Rs 105.51) with the 11.50 per cent 2004 at Rs 101.98 and Rs 102.00 (102.03). "Bond prices fell following the Reserve Bank decision to re-issue the 11.99 per cent 2009 for Rs 2,500 crore on 27 August 27", a bond dealer with a primary dealeship said. Inflows in the second half of the current fortnight include Rs 474.26 crore by way of interest payments on the 11.75 per cent 2001 on 25 August and Rs 138.5 on the 13.85 per cent 2006 on the next day. "Refinance repayments are keeping call rates at current levels, but the auction may yet sail through given reduced demand for funds ahead of Reporting Friday", a dealer with a US-based bank said. The 12.32 per cent 2011 was dealt at Rs 103.55-103.56 levels (Rs 103.62) with the 11.9 per cent 2007 between Rs102.80 and Rs 102.85 (Rs 102.85).

FORECAST: Bond prices are seen a shade lower on Wednesday.

Compiled by Raghu Mohan