They said the drop in call rates despite the central bank withdrawing the zero coupon 2000 bonds from its open market purchase list indicated that a lot of borrowers had already covered their positions last week. Call rates shot up to 30 per cent levels last week following outflows to buy bonds from the RBI's sale window. "Stray deals were also reported below 10 per cent," a primary dealer said.

FORECAST: Call rates seen steady on Tuesday.

Spot dollar
The rupee ended marginally firmer amid fresh dollar supplies hitting the forex market.It opened at 43.61/615, unchanged from the previous levels. Dealers reported good dollar supplies from foreign funds and stray direct investment flows while demand was mainly from state-run banks including the SBI."Custodian banks of foreign funds were selling. Maybe it is to pay for the large investments made last week. Today was the pay-in day on the BSE," a dealer at a foreign bank said. Foreign funds bought over $112 million worth equities on the country's bourses from Monday to Thursday last week. The net investments of FIIs during February has totalled $380.3 million.

The rupee ended at 43.60/605 per dollar, after touching a high of 43.5875. Cash/spot was not quoted as the New York market was closed for a public holiday. Tom/ spot ended at 0.75-1 paise. The RBI fixed its reference rate for the dollar at 43.60 compared to 43.61 on Friday.

FORECAST: Rupee may firm further on Tuesday.

Forward premiumsForward premiums ended lower drawing comfort from call money rates, which closed easier following inflows from bond redemptions. Call rates ended at 10-10.5 per cent against 12-14 per cent on Friday.

"There was good receiving interest for the 3 and 6 month maturities. The premiums may ease further in case the call rates fall below 10 per cent on Tuesday, a state-run bank dealer said.The six-month premium ended at an annualised 2.83 per cent against the previous close of 2.93 per cent.

According to dealers, premiums declined across all maturities, with the fall being more reflective on the far end. February dollars ended at 4/5 paise, March at 16/17 paise, while among the far forwards, July ended at 55/56 paise and August at 64/65 paise.

FORECAST: Forward premiums may ease in case call rates quote below 10 per cent on Tuesday.

Gilts
Bond prices rose on fresh inflows hitting the market from coupon redemptions. The 11.83% 2014 bond ended at Rs 107.75 as compared to morning trades of Rs 107.60. The bond ended at Rs 107.45 on Friday. Dealers said the bond prices went up by 20-25 paise in the longer-end after nearly Rs 1,000 crore returned to the system from coupon payments on various bonds, of which Rs 824 crore came from the 12.40 per cent 2013 security. Withdrawal of the zero coupon 2000 bond from the purchase window on Monday by the RBI did not deter players from buying government bonds actively. The 12% 2008 bond held steady at Rs 108.95% levels. The RBI has presently placed the security at this price for sale on its open market window. "There was one deal for Rs 108.96, with the bond remaining at the price quoted on RBI's sale list," a dealer said.

FORECAST: Bond prices seen higher on Tuesday. (Compiled by Anurag Joshi)