Spot dollar
The rupee gained to under 46.50 levels on Monday. Opening the day at 46.52/54, a shade stronger from its last close at 46.55/56, the rupee went to an intra-day high of 46.49 levels for a brief while before weakening to 46.5450/5550 by close of trades. "There was good dollar supply from foreign funds and domestic exporters coupled with the absence of follow-up import demand", a dealer said, adding: "However, the rupee's rally beyond the 46.50 level was short-lived, as some state-run banks started dollar buying heavily". A few state-run banks reportedly bought dollars heavily once it moved beyond the key level of Rs 46.50. "One state-run chemical firm reportedly bought about $35 million", a dealer said.Foreign Investments in capital market went up to $319.1 million in the last few days, and the comfortable forex reserves of the country at a shade over $40 billion has boosted sentiment the forex market.
FORECAST: Rupee seen holding steady on Tuesday.

Forward premiums
Forward dollar premiums moved in a narrow range and ended on Monday. The sixth-month annualised premium closed a bit higher at 4.49% (4.46%) while the one-year ended marginally lower at 4.56% (4.59%). "Despite appreciation in the spot-rupee to under 46.50 levels to the dollar, premiums could not come down as call rates hovered above 10%, and this put some pressure on the premiums", a dealer said. Call rates held a shade over 10% and went to an intra-day high of 12.50% on good demand for funds ahead of the twin-bond auction that was held later in the day. "There was a fear that post-auction, liquidity will tighten, and a few banks were seen borrowing aggressively", a dealer with a primary dealership said. The RBI today auctioned the 12.25% 2010 for Rs 2,500 crore and the 12.30% 2016 for Rs 1,500 crore. Due to New York holiday, there were no cash/spot deals while cash/tom finished at 0.50/0.60 paise. January dollar quoted at 7.5/8.5 paise.
FORECAST: Forward premiums seen holding steady on Tuesday.

Gilts
Bond prices were a shade down on Monday. The 11.03% 2012 paper was seen at Rs 101.31 with the 11.40% 2008 and 11.30% 2010 at Rs 104.81 and Rs 103.72 respectively. "Gilt prices witnessed a steady to downward trend in intra-day trades today. In the morning, prices moved down as call rates quoted high. Call rates held a shade over 10% on Monday, and went to an intra-day high on good demand for funds ahead of the twin-bond auction to be held later in the day. "There was a fear that post-auction, liquidity will tighten, and a few banks were seen borrowing aggressively", a dealer with a primary dealership said. The RBI today auctioned the 12.25% 2010 for Rs 2,500 crore and the 12.30% 2016 for Rs 1,500 crore. At the RBI's auction of the 12.25% 2010, the RBI accepted 81 bids for 2,500 crore at a YTM of 10.6713%, and 42 bids for Rs 1,500 crore at the auction of the 12.30% 2018 at a YTM of 11.04%. .
FORECAST: Bond prices seen more or less steady on Tuesday.

(Compiled by Raghu Mohan)