Call rates firmed up on Monday owing to demand-supply mismatch. Call rates opened at an intra-day high of 9.75 per cent compared with their previous close of 9.60 per cent. "Advance tax outflow from the system and lack of fresh inflows are keeping call rates much higher above the repo level," dealers said.

According to dealers, some stray deals were also concluded at 10 per cent. However, during the later part of the day, call rates eased as some funds entered the system. Overnight rates finally closed at 9-9.25 per cent. Tight money market conditions were evident from the repo collections. The Reserve Bank of India mopped up Rs 6 crore through three-day 8 per cent fixed-rate repos in government of India dated securities for parties holding SGL and current accounts. The central bank received and accepted two applications.

FORECAST: Call rates are seen above the repo rate on Tuesday.

Spot Dollar

The rupee strengthened by 2 paise against the dollar on Monday owing to marginalselling by exporters which increased dollar supply. The Indian currency opened at 42.53/54, unchanged from its previous close. The rupee strengthened by 2 paise during the day owing to increased supply. "Some exporters sold in the market, which strengthened the rupee against the greenback by 2 paise," a dealer with a foreign bank said.

The rupee closed at 42.51/52 compared with its previous close of 42.53/54. The Reserve Bank of India reference rate for the dollar was Rs 42.52 compared with the previous peg of Rs 42.54. According to dealers, the rupee is expected to rule at 42.50/60 throughout the week as importers are keeping away from the market.

FORECAST: The rupee is seen between 42.50 and 42.60 on Tuesday.

Forward Premiums

Forward premiums remained stable on Monday. Premiums opened at their previous closing levels and eased by 1 paise during the day. The six-month annualised cover closed at 7.45 per cent, three months at 6.3 per cent and one month at 5.36 per cent.

The December premiumclosed at 0.25-0.50 paise, January at 19-20 paise, February at 39-40 paise, March at 66-68 paise, April at 97-99 paise, May at 126-129 paise, June at 156-158 paise, July at 188-191 paise, August at 121-122 paise, September at 254-257 paise, October at 287-289 paise and November at 317-322 paise. According to dealers, premiums are expected to rule stable at the existing levels as importers are not paying in forwards and exporters are not receiving. "Premiums are expected to remain stable as importers are not paying in forwards," a dealer with a private bank said.

FORECAST: The six-month annualised premium is seen at 7.4-7.8 per cent on Tuesday.

Gilts

Prices of short-term government securities firmed up by 2-3 paise on Monday. Gilt prices opened at their previous closing levels. When call rates eased to 9-9.25 per cent, gilt prices increased by 2-3 paise. "Gilt prices corrected themselves and aligned on Monday in response to the hike in treasury bill yields," dealers said. The zero coupon 1999paper quoted at Rs 98.44 against the previous close of Rs 98.40. The 11.40 per cent 2000 paper quoted at Rs 100.08 and the 11.55 per cent 2001 paper at Rs 100.07.

The wholesale debt market of the NSE witnessed trades worth Rs 325.95 crore. The 11.40 per cent government loan maturing in 2000 traded worth Rs 50 crore at a weighted yield of 11.33 per cent. Commercial papers of Larsen and Toubro maturing on March 30, 1999, traded worth Rs 10 crore at a yield of 10.90 per cent.

FORECAST: Gilt prices are seen stable on Tuesday.