Overnight rates continued to rule firm at above 9 per cent levels on Monday. Opening the day at 9-9.25 per cent from its weekend's close at 8.25-8.75 per cent, call rates went ruled at these levels in early trades as traditional lenders stayed away. "A few state-run banks were seen trying to push up rates, but there were no takers at quotes of 9.20-9.25 per cent," a dealer with a European bank said. Call rates had firmed up in last two days of the previous week. Outflows of Rs 5,000 crore on account of the Reserve Bank's auction of the 11.99 per cent 2009 and the mop of Rs 2,000 crore via OMO had put pressure on call rates. In later day trades, reduced demand for funds, and ample liquidity saw call rates ease to close at 8.75-9 per cent. Elsewhere, the National Stock Exchange pegged its overnight Mibid and Mibor at 8.94 per cent and 9.16 per cent with the fortnightly one at 8.72 per cent and 9.16 per cent.

FORECAST: Call rates seen easing to 9.15 per cent on Tuesday.

Spotdollar

The rupee weakened to an intra-day low of 43.5850/5950 on Monday, but gained by nearly 18 paise by close of trades to 43.40/41. Opening the day at 43.47/49 from its weekend's close at 43.46/48, the rupee went lower by 9 paise to 43.55/56 by mid-session on good corporate interest for dollars. "There was both corporate and inter-bank demand for dollars. State-run and foreign-owned bank built up long-dollar positions with dollar interest building up," Mecklai Financial Services' senior vice-president, KN Dey, said. Later in the day, the rupee rallied all the way to close at 43.40/41 as the State Bank started its dollar sales. "State Bank was selling dollars at 43.57 levels. Other banks started unwinding long-dollar positions and the rupee closed stronger at 43.40/41", Kanji Pitamber & Co's partner, Gautam Ashra, said. Cash/spot quoted at 1/.25 paise (1.50/1.75 paise), cash/tom at 0.2750/0.6250 paise (1.25/1.50 paise) with tom/spot at 0.3750/0.6250 paise (0.25/0.50 paise). The Reserve Bank peggedits reference rate for the dollar at 43.54 as against its previous peg of 43.45. The euro, meanwhile, opened at 46.60 (46.56) against the rupee, went to a high of 46.65 (46.73) before closing at 46.41 (46.67).

FORECAST: Rupee seen at 43.44/45 levels on Monday.

Forward premiums

Forwards premiums quoted higher on Monday in intra-day trades as the spot-rupee weakened to 43.5850/5950 levels. The six-month annualised forward cover was seen at 4.65 per cent (4.57 per cent) by close of trades after quoting higher at 4.76 per cent earlier in the day. "There was paying pressure in the far forwards," a dealer with a US-based bank said, adding, "While near terms premiums were seen stable, far forwards went comparatively higher in intra-day trades, but edged lower as the spot-rupee rallied to close at 43.40/41 to the dollar". September dollars were quoted at 26/27 paise (25/26 paise), October was unchanged at 40/42 paise, while in the far forwards, January was seen at 96/98 paise (95/96 paise) andFebruary at 111/114 paise (110/111 paise). "There appears to be a higher premiums on forward dollars with elections just around the corner", a dealer with a brokerage said.

FORECAST: Six-month annualised forward cover seen at 4.60 per cent on Tuesday.

Gilts

Security prices fell in intra-day trades on Monday, but recovered by close. The 12.40 per cent 2013 was quoted at Rs 103.82/88 (Rs 103.79/83), but was seen lower at Rs 103.80 levels. "Bond prices fell in early trades as the spot-rupee weakened. Later, bond prices gained as the rupee rallied to close at 43.40/41," a dealer with a primary dealership said. The 12.32 per cent 2011 was dealt at Rs 103.82-103.88 (104) while the 11.90 per cent 2007 was seen at unchanged Rs 103.24. "There is enough liquidity in the market...bond prices would have gone higher had it not been for the weakness in the spot rupee," a dealer with a European bank said.

FORECAST: Bond prices to firm up on Tuesday.