Rates on short-term money market instruments rose by 10 basis points today because mutual funds continued to stay away on expectation that coming weeks could see a further rise in rates.
The Budget has pegged the central government’s market borrowing for 2009-10 (April-March) at Rs 4.51 lakh crore, Rs 89,300 crore more than that indicated in the Interim Budget. Investors also await clarity on borrowings from the meeting of RBI and finance ministry officials on July 17, when the borrowing calendar is likely to be decided. Today, banks stepped up investments in short-term papers noting ample liquidity.
Ample liquidity was reflected in subscriptions at RBI’s reverse repo tender, which continued to be above Rs 1 lakh crore.
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