Call rate to remain steady

The interest rates in the overnight inter-bank market may open on a steady note due to Reserve Bank of India’s steps to ease pressure on liquidity in the system.

The demand for funds would remain high on Monday, as banks prefer to cover their product positions (meet regulatory norms like Cash Reserve Ratio) for the new reporting fortnight, dealers said.

The call rate may hover in the 6.80-7 per cent band. The overnight call rate moved in a range of 6.5-6.9 per cent on Thursday.

As a step to take away the pressure on system, RBI has cut the Statutory Liquidity Ratio by one per cent to 24 per cent. It also announced plans to buyback government bonds worth Rs 48,000 crore over the next month. Market players will wants to see details of the bond buyback schedule.

Dealers said RBI wants overnight market rates to stablise closer to the operative policy rate (repo rate of 6.25 per cent for now). But higher demand for business would exert an upwards pressure on rates. Banks are expected to borrow around Rs 1,00,000 crore at RBI’s repo auction.