Call rates ended at 8.40-8.50%. Dealers said the market had enough cushion by way of RBI refinance in two stages, at the bank rate of 8% and at 10 per cent. RBI data on Saturday showed the refinance outstanding on Friday at the bank rate had dropped to Rs 4,430 crore from Rs 10,000 crore earlier in the week. Dealers said a drop in rates below 8% was unlikely as banks repaid the outstanding refinance. Supplies had improved in the past week following the open market bond purchases and sterilisation of dollar inflows mainly from foreign funds investing in India equities.
FORECAST: Call rates seen steady onTuesday.

Spot dollar
The rupee ended steady in a dull trading session on Friday. The rupee opened at 43.58/585, little changed from the previous close of 43.5775/585. Dealers said the market witnessed two-way flows with fresh dollar inflows mainly from foreign investors being neutralised by demand from state-run banks. The public sector banks have been active in buying dollars, reportedly on behalf of the RBI. The central bank started mopping-up dollars to provide some liquidity cushion to the money market. "There were also export remittances and some NRI inflows from the Gulf," a private dealer said. The rupee ended at 43.575/58. The central bank fixed the reference rate for the dollar at 43.58 as compared to 43.49 on Friday. Cash/spot ended at 1/1.25 paise, with cash/tom and tom/spot closing at 0.25/0.50 paise each.
FORECAST: The rupee seen steady on Tuesday.

Forward premiums
Forward premiums ended slightly higher on paying pressure on Monday. Dealers said near-termforward premia tracked call rates initially in the morning but firmed up during the day as bond prices fell. "With bonds weakening and the market not expecting a lowering of interest rates till April, there was some inter-bank paying," a dealer at a foreign bank said. A dealer at a state-run bank said there was some corporate paying in the forward market.

The six-month premium ended at an annualised 3.45 per cent on Monday compared to 3.20 per cent on Friday. It had opened at 3.26 per cent. The one-year premia ended at 3.12 per cent as compared 3.10 per cent on Friday. In the near forwards, March dollars ended at 10/11 paise, April at 23/24 paise, while among the far forwards September closed at 80/81 paise and October at 91/92 paise.
FORECAST: Premiums seen range-bound on Tuesday.

Gilts
Bond prices dipped on Monday on concerns that liquidity may tighten after tax outflows later in the week and amid uncertainties about interest rates coming down. Bond prices, which had shown some signsof recovery in mid- morning deals, extended losses towards the close as dealers reported lack of buying support. "It's basically a wait and watch situation. Nobody wants to take positions until the outlook for interest rates becomes clearer," a dealer said. The 11.83%2014 bond ended at Rs 106.55, down from Rs 106.75 in morning trade and compared to its Saturday's levels of Rs 107.10. The 12 per cent 2008 bond ended at Rs 107.55 against Rs 107.83 in mid-morning deals and Saturday's levels of Rs 108.20. Dealers said the market was also apprehensive of liquidity turning tight later in the week following large outflows towards advance tax payments.
FORECAST: Bond prices seen higher on Tuesday.

(Compiled by Anurag Joshi)