The rupee is likely to strengthen against the dollar on Monday because banks may sell the greenback, expecting local share indices to open firm tracking US stocks. Forward dollar-rupee premia are expected to rise because banks may forward the dollar on behalf of importers if the rupee rises.
The sentiment for the rupee may also remain bullish as security forces brought to an end attacks by terrorists at various places in south Mumbai on Saturday. Dollar sales by exporters may add to the rise in the rupee. However, dollar demand from importers may prevent a sharp rise in the Indian unit.
Gilts: Buoyant mood
Government bond prices are expected to open firm on Monday as investors may continue to make purchases on expectations that the RBI may cut interest rates at the earliest. Prices are likely to stay firm because bond traders may continue to make purchases, noting a decline in the weekly headline inflation rate. A higher-than-expected July-September growth data may also prompt traders to buy more gilts, which may keep prices firm.
Call: In a range
The one-day call money rate may hover around 6.50 per cent amid subdued demand from banks. The demand is expected to remain subdued because banks have met much of the reserve needs for the current Reporting Fortnight in the first week itself. The one-day call rate is seen moving in the range of 6.30-6.70 per cent compared with 6.40-6.45 per cent on Friday for two-day loans.
