Call rates were rangebound on Monday. Opening the day at 8-8.20 per cent, call rates went briefly to an intra-day high of 8.25 per cent, but ruled in the 8-10-8.15 per cent band for most of the day. "Trades were dull. There appears to be enough liquidity... the feeling is that RBI cash reserve ratio (CRR) one percentage cut will more than take care of any liquidity needs", a dealer with a US-based bank said. The RBI's CRR cut is a two-stage one effective from the next fortnight with the second one from 20 November. "The CRR cut will infuse over Rs 8,000 crore by way liquidity... call rates held stable today not because of the announced CRR cuts, but because of the fact that most banks had never anticipated a CRR cut and covered in the first part of the current fortnight", a dealer with a European bank said. Trades were squarish today, and at close of trades, call rates were seen at 8.10-8.15 per cent. Most of the deals were struck at 8.05-8.15 per cent levels.

FORECAST:
Call rates to hold 8-8.10 per cent levels on Tuesday.

SPOT DOLLAR

The rupee held steady against the dollar in dull trades. Opening the day at 43.37/38, unchanged from its weekend's close, a bit of dollar-interest for dollars saw the rupee go lower to 43.3950/4050 levels. "Trades were mostly inter-bank. The State Bank of India and other nationalised banks were purchasing dollars... the overall feeling is that the rupee will gain in the near term. The RBI though will see to it that never happens, and it appears state-run banks are buying dollars on RBI behalf", a dealer with a Gulf-based bank said, adding: "The selling on the bourses by foreign institutional buyers is a cause of concern though". At close, the rupee was seen at its intra-day low 43.3950/4050. Cash/tom was quoted at 0.50/0.75 paise with both cash/spot and tom/spot at 0.25/0.3750 paise. The RBI fixed its reference rate for the dollar 43.38 as against its previous 43.42. Elsewhere, the rupee opened at 45.73 against the euro, went to an intra-day low of 45.95 to finally settle at 45.85.

FORECAST: Rupee seen at 43.40 levels against the dollar on Tuesday.

FORWARD PREMIUMS

Forward premiums continued with their southward sojourn on Monday. Near-term forwards moved down by 2-3 paise while far forwards finished by 3-4 paise. The sixth-month annualised forward premium finished at 5.10 per cent (5.19 per cent) with the one-year one at 5.25 per cent (5.31 per cent). "The downward movement in premiums is in response to the one percentage CRR cut... premiums continued to track call rates", a dealer with a US-based bank said. November premiums closed at 13/14 paise (14-15 paise), December at 28/29 paise (30-31 paise) with April at 105/107 paise (109-110 paise) and May at 126/128 paise (129-130 paise). "There was a bit of receiving today... exporters can be expected to come in now that premiums are clearly on the downward curve", a dealer with a brokerage said.

FORECAST: Six-month annualised forward cover seen at 5.10-5.15 per cent levels on Tuesday.

GILTS

Bond prices continued their upward movement on Monday. The 12.50 per cent 2004 at Rs 105.50 paise (Rs 105.46) with the 11.99 per cent 2009 at Rs 102.68-102.74 paise (Rs 102.77). "Bond prices have gained after the RBI's one percentage cash reserve ratio cut (CRR)... the market continues to be bullish. Prices would have gained had it not been for profit taking at higher levels", a dealer with a primary dealership said. The 11.90 per cent 2007 was dealt at Rs 103.05-103.77 (Rs 103) with the 12.32 per cent 2011 paper was dealt at Rs 103.70-103.77 (Rs 103.69). The RBI's CRR cut is a two-stage one effective from the next fortnight with the second one from 20 November, and will infuse over Rs 8,000 crore by way liquidity. "There are rumours that the RBI will come out with a bond auction ahead of the effective CRR cut date... I think a big rally will be seen only after 20 November when the two-stage CRR cut will be fully through", a dealer with a US-based bank said.

FORECAST: Gilt prices seen gaining by 3-5 paise in intra-day trades on Tuesday.