The RBI moves to hike the bank rate, CRRand reducing all refinance limits by 50 % for banks had no impact on the inter-bank market. The RBI increased the bank rate by 100 basis points to 8 % while the CRR was hiked by 50 basis points to 8.50%. Inflows of nearly Rs 600 crore were seen today on redemption of securities and coupon payments. The RBI received a single bid for Rs 5,000 crore at 8% at its repos-sale under the liquidity adjustment scheme, which was accepted. No bids were received at the reverse-repos auction. At close, call rates were seen at 8-8.05 % levels.
FORECAST: Call rates seen at 8 per ent levels on Tuesday.

Spot dollar
The rupee recovered by 30 paise against the dollar on Monday. Opening the day at 44.70/72 from its last close at 45.01/02, the rupee was rangebound in thin trades. "Dollar demand continues, but today we saw nothing of what happened on Friday", a dealer with a US-based bank said. The rupee went to an all-time low of 45.07/08 and ended 11 paise lower on heavy dollar demand from corporates and importers on Friday. "The SBI was offering dollar quotes, and there was enough supply of dollars to take care of the demand", a dealer said. The RBI increased the bank rate by 100 basis points to 8 %, the CRR by 50 basis points to 8.50 %, and slashed eligbile refinance limits to bank by 50 % to support the rupee. At close, the rupee was seen at 44.74/75. Cash/tom quoted at 0.50/0.3750 paise, cash/spot at 0.50/0.75 paise with tom/spot at 0.25/0.3750 paise. The RBI fixed its reference rate for the dollar at 44.72 as against its previous fix at 45.02.
FORECAST: Rupee seen at 44.75 levels on Tuesday.

Forward premiums
Premiums ended a shade higher on Monday. The six-month annualised forward premia traded higher at 4.70% (3.87%). "A few players were seen paying.. demand for forward dollars is good. Premiums were quoting high to steady despite the recovery in the spot-rupee", a dealer said. July dollars ended at 4/5 paise (3/4 paise), August at 26/27 paise (18/19 paise), while in the far end, January closed at 106/108 paise (88/90 paise) with February at 121/123 paise (101/103 paise). On Friday, the rupee fell to an all-time low of 45/07/08, but closed at 45.01/03 after the RBI increa-sed the bank rate by 100 basis points to 8 % and the CRR by 50 basis points to 8.50%. Despite the recovery in the spot market, "sentiment is geared towards a weaker rupee. The rupee may continue to fall below the 45 mark despite the measures taken by the RBI.. the current slide is believed to have been on importers and FIIs demand, and this will continue despite monetary measures".
FORECAST: Premiums seen around 4.50 per cent on Tuesday.

Gilts
Bond prices ended sharply lower on liquidity concerns on Monday. "There are fears that if the present measures continue, then interest rates could firm up", an analyst with a primary dealership said. Bond prices fell by over rupee today. The 12.50 per cent 2004 closed at Rs 104.40 down from its previous levels at Rs 105.50 thereabouts. Similarly, the 11.90 per cent 2007 fell to Rs 103 levels from Rs 104. The Reserve Bank increased the bank rate by 100 basis points to 8 per cent while the CRR was hiked by 50 basis points to 8.50 per cent. The central bank also slashed the eligibile refinance limits for bank by 50 per cent, including under the collateralised lending facility. On Friday, the 11.90 per cent 2007 bond ended atRs 104.50 from the previous close of Rs 105.90..
FORECAST: Bond prices seen in a lower to flattish curve on Tuesday.

-- (Compiled by Raghu Mohan)