The overnight call money rates opened at 6.50-7 per cent on Monday and stayed firm owing to good demand for funds from corporates and banks.

The rates hovered at the opening levels throughout the day without any significant movement. As there was adequate liquidity in the market, the rates were steady, dealers said. They closed at 6.25-6.75 per cent. Most deals were conducted between 6.50 per cent and 7 per cent, dealers said.

The Reserve Bank of India mopped up Rs 1 crore through its three-day fixed-rate repos in government of India dated securities.

The total turnover of the Securities Trading Corporation of India was Rs 2,800 crore on a weighted average of 6.64 per cent. The Discount Finance House of India extended support to the tune of Rs 2,100 crore.

FORECAST: The call money rates are likely to hover around 6-6.50 per cent on Tuesday.

Spot Dollar

The rupee weakened against the dollar on Monday to an all-time low of 41.18/20.

It opened at 40.75/80, weakerthan its previous close of 40.65/67, and fell to 40.80/95 immediately. The State Bank of India (SBI) sold dollars, apparently on behalf of the Reserve Bank of India, to prop up the rupee.

But once the SBI left, the rupee breached the 41 mark to trade at 41.18. "Sentiment is bearish after the S&P's revision of India's rating to negative from stable," a dealer in an European bank said.

"The rupee fell because of demand from importers who wanted to cover as they felt that the rupee will weaken after the S&P's revised rating," a dealer with a private sector bank said. The dollar's high for the day was 41.18 while its low was 40.75.

FORECAST: The rupee is likely to weaken to 41.50 on Tuesday.

Forward Premiums

The six-month annualised forward cover went up on Monday on the back of the weakening of the spot rupee to 9.35 -- 100-basis points higher than the Friday's close of 8.30 per cent.

The premiums rose by 20 paise as the spot rupee hit a new low of 41.18. The spot rupee finallysettled at 40.94/97, money-market dealers said.

"There was paying pressure from importers when the spot rupee weakened," a dealer in a private bank, recounting the day's trading, said. The spot rupee weakened on panic-buying by importers after the New York-based Standard &Poor's revised India's outlook to negative. Some corporates, too, were in the market to hedge their borrowings.

The six-month forward premiums were, however, expected to cross the 10 per cent barrier on Tuesday.

FORECAST: The six-month annualised cover is seen at 9.5-10 per cent on Tuesday.

Gilts

The prices in the government securities market fell by 10-15 paise on Monday. Though there was buying interest in the new securities, not many deals were struck, dealers said.

The new government loan 2008 at a coupon of 12 per cent was traded at 45 paise, whereas the 11.5 per cent 2004 was traded at 98.50 paise. There was not much activity in the short- and medium-dated securities.

The wholesale debt market of the NSEwitnessed trading worth Rs 248.39 crore. The 14 per cent corporate debenture of Reliance Industries maturing in 2000 was traded for Rs 60 crore at a weighted yield of 13.64 per cent. The floating rate bond of central government maturing in 1999 was traded for Rs 35 crore at a yield of 10.59 per cent.

FORECAST: The prices in the government securities market are expected to fall on Tuesday.