Call rates firmed up to an intra-day high of 8.50 per cent on Monday. Opening the day at 8.25-8.35 per cent, higher from its Saturday's close at 8.10-8.25 per cent, call rates went to its day's high of 8.50 per cent on good demand for funds. "Outflows of Rs 2,129 crore from Friday's Reserve Bank on-tap sale of the 12.30 per cent 2016 has affected the market. There was no cash-market (forex) today as the US was closed for Independence Day celeberations. Banks could not generate rupee-funds by selling dollars, and had to borrow from the call market", a dealer with a European bank said. By close, call rates were seen at 8.30 per cent levels. Most of the deals were struck at 8.40-8.50 per cent thereabouts. The Discount & Finance House of India extended market support to the extent if nearly Rs 1,500 crore. The Reserve Bank did receive any bids at its three-day 6 per cent fixed rate repos held today. Elsewhere, the National Stock Exchange pegged its overnight Mibid and Mibor at 8.28 per centand 8.44 per cent with the fortnightly at 8.41 per cent and 9.07 per cent respectively.

FORECAST: Call rates seen at 8.25 per cent levels on Tuesday.

Spot dollar

The rupee gained by 13 paise to close at 43.23/25 on Monday. Opening the day at 43.28/30, stronger from its weekend's close at 43.3850/3950, the rupee hovered at 43.2850/2950 levels till mid-session. "Recapture of Tiger Hills and the agreement reached between US President, Bill Clinton, and Pakistani prime minister, Nawaz Sharif, under which guerrillas who crossed into the Indian side of the LoC are to withdraw, saw the rupee gain. The rupee would have gained to under 43.20 levels had the State Bank not bought dollars", a dealer with a brokerage said. The State Bank reportedly bought dollars worth $50 million from 43.2350 to 43.2550 levels. Foreign banks followed suit, but later unwound positions. There was a fair bit of dollar sales by a few other state-run banks, dealers said. There was no cash deals today with US remaining closed.Tom/spot close at 0.25/0.50 paise. The Reserve Bank pegged its reference rate for the dollar at 43.28, lower from its previous fix at 43.38. Elsewhere, the rupee quoted at 44.41 (44.35) against the Euro in opening trades, went to an intra-day low of 44.45 (44.45) before closing at 44.23 (44.34).

FORECAST: Rupee seen at 43.18-43.24 levels on Tuesday.

Forward premiums

Forward premiums eased further three to four paise on Friday. The six-month annualised forward cover ruled unchanged at 5.05 per cent (5.15 per cent). August dollars quoted unchanged at 27/28 paise (29/30 paise) with September at 44/46 paise (48/49 paise). February premiums were seen at 144/146 paise (155/157 paise), March at 167/169 paise (179/181 paise) and April at 189/815 paise (202/205 paise). "The movement was largely in line with the gains in the spot rupee, but there was hardly any receiving or paying", Mecklai Financial Services senior vice-president, KN Dey, said, adding: "New York was closed today, and exporterscould come and receive on Tuesday. There could also be some covering, but both the spot-rupee and forwards should hold steady until the general elections in September".

FORECAST: Six-month annualised forward seen at 5.03-5.10 per cent on Tuesday.

Gilts

Bond prices firmed up across all maturities on Monday as news of Tiger Hills capture and the agreement reached between US President, Bill Clinton, and Pakistani prime minister, Nawaz Sharif, under which guerrillas who crossed into the Indian side of the LoC are to retreat, impacted on the market. The 11.98 per cent 2004 also doing likewise at Rs 102.64 (Rs 102.34). "The re-issued 11.90 per cent 2007 was quoted at Rs 101.04/05 (Rs 100.76)", a dealer with a primary dealership said, adding: "Bond prices will show continue their upward movement on Tuesday. The 11.50 per cent 2004 was dealt at Rs 100.74 compared to Saturday's Rs 100.56-100.59. The 13.05 per cent 2007 was dealt at Rs 106.60 (Rs 106.45) with the 11.75 per cent 2001 paper going atRs 101.56 (101.48 levels). "Bond prices had fallen a shade by close of trades as there was profit-taking as prices peaked in intra-day trades", a dealer with a US-based bank said. The 11.40 per cent 2000 quoted between Rs 100.80-100.85 (Rs 100.60). Meanwhile, the Reserve Bank announced the auction of 91-day T-bills, 182-day T-bills, and 364-day T-bills for Rs 100 crore each.

FORECAST: Bond prices will continue upward trend on Tuesday.