The yen plumbed a 2-1/2 year low against the dollar on  Monday as Japan’s central bank faced relentless political pressure to deliver bold stimulus, while Asian stock markets got off tosubdued start with Tokyo closed for a public holiday.

The yen hit a 2-1/2-year low versus the dollar on Monday after Japanese Prime Minister Shinzo Abe stressed the need for forceful monetary stimulus and urged the Bank of Japan to set a medium-term inflation target.  Oil prices fell in heavy trading on Friday, pulled lower by a drop in gasoline on expectations that a large number of European cargoes could hit U.S. shores, while a key spread narrowed sharply on news of the start-up of a major Midwest pipeline.
U.S. Treasuries prices gained in choppy trading on Friday as investors struggled to find a new range for the debt, weighing a brighter economy against impending Washington budget
battles.

    LOCAL MARKETS PREVIOUS CLOSE

    * BSE index 19,663.64 (flat)
    * NSE index 5,951.30 (-0.29 pct)
    * Rupee 54.7550/7650 per dollar (54.56/57)
    * 10-year bond yield 7.87 pct (7.88 pct)
    * 5-year OIS rate 7.18 pct (7.18 pct)
    * 1-year OIS rate 7.53 pct (7.55 pct)
    * Call money 7.90/7.95 pct (7.95/8.05 pct)
    
    KEY FACTORS/EVENTS TO WATCH

India will release wholesale price inflation data for December around 0630 GMT. The headline inflation probably edged up to 7.4 percent from 7.24 percent in November. India will release monthly consumer price inflation data for December on Jan 14 at 11.00 IST (5.30 GMT).  The Reserve Bank of India’s deputy governors will meet officials from the debt and forex market alongside representatives of the Fixed Income Money Market and Derivatives Association of India for a pre-policy consultation at 1030 GMT.

    MAJOR DEALS/ACQUISITIONS

Airports Authority of India (AAI) has invited bids on Monday to raise up to 5 billion rupees ($91.47 million) via five-year bonds. State-run transmission utility Power Grid Corp of India printed the tightest coupon for an Indian credit in the 10-year universe. The US$500 million Reg S bond was priced at treasuries plus 210 bps, tighter than the initial price talk of Treasuries plus 245 bps.