Call Rates Slip On Fund Glut, Govt Papers Rise

Call rates eased today and came off from an intra-day high of 8.75 per cent to close in the 7.25-7.75 per cent range on the back of comfortable liquidity in the system. The government securities market saw the prices moving up by 10-15 paise in the medium to long end papers.

Call rates opened around 8.50-8.75 per cent against the previous close of 8.50-8.70 per cent.

"Call rates eased on the back of ample liquidity and this led to buying interest in gilts," said an official with a private sector bank.

The Reserve Bank of India (RBI) received one bid for Rs 6,500 crore under the repo auction held under the liquidity adjustment facility (LAF) but rejected it.

Under the reverse repo auction, it received 8 application amounting to Rs 505 crore but accepted 4 bids for Rs 309 crore at a cut-off yield of 8.75 per cent.

Inflows into the banking systems amounted to Rs 1,580.137 crore while outflows amounted to Rs 1,145 crore, resulting in a net inflow of Rs 435.137 crore.

In the government securities market there was renewed buying interest and shift in focus to the medium-term papers, which rose by 10-15 paise. The long-end papers were also up by around 10-12 paise. Papers in the short-end rose marginally by about three paise.

A public sector bank official said that an auction was expected soon to mop up excess liquidity in the system.

Call rates are expected to be range bound (7.25-7.75 per cent) tomorrow while the medium-term papers will again move up by 10-15 paise.