The Reserve Bank of India's (RBI) announcement on the yield to maturity of government securities did not have much impact on the overnight call money market on Monday. The call rates opened at 7 per cent compared with their previous close of 6.5 per cent.

The call rates eased a little to close at 6.50-6.75 per cent, dealers said.The call money market did not witness much activity. The RBI mopped up Rs 838 crore through a three-day fixed-rate repo in government of India dated securities for parties holding SGL and current account. The interest rate for the repo is pegged at 7 per cent. The central bank received 12 applications and accepted all of them. The RBI also announced a three-day fixed-rate repo in government of India dated securities on April 15.

FORECAST: The call rates are likely to hover at Monday's level onTuesday.

Spot Dollar

The spot rupee witnessed little volatility on Monday. It slipped from 39.53 to 39.62 as the State Bank of India (SBI) went on adollar-buying spree for its corporate clients. Other banks also jumped into the fray, dealers said.

"The SBI is buying dollars as public sector corporates are making remittances," a dealer in a private sector bank said. On Saturday, the rupee opened at 39.50 to the greenback, against its previous close of 39.53. For most part of Saturday, the rupee was seen in a narrow 3 paise band between 39.51 and 39.53. "After the spate of holidays, there seems to be a demand for dollars," a dealer said. On Monday, the rupee's low was 39.53 and its high was 39.62.

FORECAST: The rupee may weaken if the the SBI continues on its dollar-buying spree.

Forward Premiums

The forward market was quiet on Monday. Although there were rumours that the Reserve Bank of India intervened in the market, they could not be confirmed.

"There was not much action in the forward segment," a dealer in a private sector bank said. The six-month annualised forward cover slipped marginally to close at 6.50 per cent, weakerthan its previous close of 6.5 per cent. The one-month forward closed at 3.5 per cent, while the one-year one closed at 8 per cent. "One month is low because of the low call rates," a dealer said.

The inter-bank forex market had remained closed from Wednesday. Forward deals were struck on Monday.

FORECAST: Trading is likely to be low on Wednesday. The six-month forward cover may hold at 6.5-6.8 per cent.

Gilts

The prices in the government securities market moved up by 15-20 paise on Monday. The impact of the Reserve Bank of India's announcement on yield to maturity of government securities was felt in the market as most public sector banks were seen buying securities, whereas foreign banks and private sector banks were seen selling them, dealers said.

"Much activity was seen in the medium- and long-term securities," dealers said.

The wholesale debt market of the NSE witnessed trades worth Rs 437.97 crore. The 11.10 per cent government loan maturing in 2003 was traded for Rs 75 croreat a weighted yield of 11.09 per cent. The 11 per cent government loan maturing in 2002 was traded for Rs 50 crore at a weighted yield of 10.93 per cent.

FORECAST: The yields in the government securities market are likely to go up by the end of the week.