The call rates opened at 7-7.05 per cent and dipped to 6.75-7 per cent at the close owing to excess funds in the system. Inflows of over Rs 11,000 crore due to reversal of the RBI repo conducted last week in addition to around Rs 189.29 crore on coupon payments have vastly increased loose liquidity in the market, dealers said.

Most operators are awaiting the announcement of the semi-annual credit policy on April 29. The auction of the 10-year government paper for Rs 4,000 crore is scheduled a day after the credit policy. The Securities Trading Corporation of India weighted average rate was 6.98 per cent on a turnover of Rs 1,000 crore. Meanwhile, the market ended on a squarish note.

FORECAST: The call rates are likely to rule at 6-6.50 per cent on Wednesday.

Spot Dollar
Therupee opened at 39.70/71 on Monday, unchanged from its previous close.It stayed firm for most part of the day, but dipped to 39.75 owing to the State Bank of India (SBI) dollar-buying. The SBI was in the market to buy dollars for its public sector clients, dealers said.

"Month-end demand for the greenback came in from the SBI which saw the rupee weaken.It was the usual demand that comes in at the end of every month," a dealer said. The dollar's high for the day was 39.75 while its low was 39.71. Most deals were struck at 39.70/71, but towards the end of the most of the trades were transacted at 39.73/74. "There were sellers at 39.75 which saw the rupee strengthen marginally to 39.73/74," a dealer said. It closed at this level.

FORECAST: The rupee is likely to be stable on Wednesday.

Forward Premiums
Forward premiums remained unchanged in the inter-bank forex market onMonday. "It was a dull day and there was very slight movement in the forward premiums," a dealer in a private banksaid. The six-month annualised forward cover ended at 6.80 per cent, down from 6.65 per cent on Friday.

"There was a movement of 2-3 paise during the day. Premiums came down but went up on some receiving pressure at the end of the day," a dealer in a private bank said. One-year forwards closed at 7.3 per cent while the one-month ones closed at 3.4 per cent.

Premiums are expected to fall across the board as the Reserve Bank of India is expected to cut the cash-reserve ratio and the Bank Rate. Inter-bank dealers expect more liquidity after the credit policy on May 29.

FORECAST: The six-month annualised cover is seen at 6.50 per cent on Wednesday.

Gilts
The prices in the government securities market shot up by 40-60 paise on Monday. At the longer end, the prices increased by 50-60 paise, whereas for medium- and long-dated securities, the prices rose by 25-40 paise.

Almost all nationalised and private sector banks and most primary dealers rushed to buy securities across all maturities,especially long-dated ones and took positions on the eve of the slack season credit policy as the market will remain closed on Tuesday. The market expects the yield across all maturities to fall.

The wholesale debt market of the NSE witnessed trading worth Rs 744.94 crore. The zero-coupon government bond maturing in 2000 was traded for Rs 75 crore at a weighted yield of 10.09 per cent. The 11.10 per cent government stock maturing in 2003 was traded for Rs 89 crore at a weighted yield of 11 per cent.

FORECAST: The yields in the government securities market are expected to fall by the end of this week.