The overnight rates closed at the repos level on Monday. They opened steady at 6.25-6.50 per cent, compared with their previous close of 6.50 per cent.

They remained at 6.25-6.50 per cent throughout the morning session.

However, in the afternoon, they eased to 6 per cent to finally close at 5-5.50 per cent.

According to dealers, the overnight interest rates ruled easy due to ample liquidity in the system. The Reserve Bank of India mopped up Rs 3,000 crore through three-day fixed-rate repos.

The total turnover of the Securities Trading Corporation of India was Rs 2,100 crore and the weighted average was 6.00 per cent. The Discount Finance House of India extended market support to the tune of Rs 1,300 crore.

FORECAST: The call rates are expected to hover around 5.50-6.50 per cent on Tuesday.

Spot Dollar

The rupee opened at 42.53/55 against the dollar on Monday, little changed from its previous close. By mid-session, the local currency slid to 42.57/59 ascorporates and banks bid for dollars.

"The Diamond Trading Corporation (DTC) was seen making dollar purchases," dealers said.

"The rupee would have gained against the dollar today... the weakness was largely on account of the DTC's dollar purchases," a dealer in a brokerage said.

In later trades, the rupee touched its intra-day low of 42.58/60 and closed at this level. Cash/spot was quoted at 0.25/0.50 paise and cash/tom at 0/0.25 paise.

Elsewhere, The Reserve Bank of India fixed its reference rate for the dollar at 42.59 compared with its previous fix of 42.47.

FORECAST: The rupee is seen in the 42.50-42.55 band on Tuesday.

Forward Premiums

Receiving pressure across the board saw forward premiums weaken on Monday. The six-month annualised forward cover gained slightly to close at 8.56 per cent compared with its previous close of 8.72 per cent. August dollar closed at 32/34 paise, September at 64/66 paise, October at 96/98 paise and November at 131/133 paise.

In the far forwards,premiums weakened by 10-12 paise.

January dollars ended at 201/205 paise, February at 235/237 paise, March at 272/275 paise and April at 310/312 paise. Lower call rates also helpedforward premiums gain, dealers said.

Call rates closed lower at around 5.50 per cent after opening at 6.25-6.50 per cent.

"Quite a few exporters and corporates were seen receiving premiums... there is not much of covering," dealers said.

FORECAST: The six-month annualised forward cover is seen at 8.45-8.60 per cent on Tuesday.

Gilts

The government securities market remained listless on Monday. The market witnessed little activity, dealers said. "Sellers were quoting at high prices across all maturities and buyers were not willing to buy at that rate," a dealer said. According to dealers, traders were not taking any position due to the uncertainty hovering in the market.

The wholesale debt market segment of the NSE witnessed trading worth Rs 139.48 crore. The 11.55 per cent government security maturing in2001 was traded for Rs 20 crore at a weighted yield of 11.46 per cent. The 12.30 per cent government security maturing in 1998 was traded for Rs 20 crore at a weighted yield of 9.27 per cent.

The 16 per cent non-SLR bond of IFCI maturing in 2003 was traded for Rs 10 crore at a yield of 13.78 per cent. The 14-day treasury bills maturing on July 25, 1998, were traded for Rs 5 crore.

FORECAST: The government securities market is likely to remain dull on Tuesday.