Call Seen In 6.75-7.25% Range

Call money rates are likely to be in the range of 6.75 per cent to 7.25 per cent this week on the back of comfortable liquidity and lower demand in the second week of the reporting fortnight.

Dealers said most of the banks and primary dealers have already covered their positions in the first week and there is very little demand left.

A dealer with a private sector bank said, "So far, the demand for the overnight money has been low in the current fortnight because of huge deposit mobilisation by the commercial banks. The demand is likely to decline further in the coming week."

Call rates remained in the range of 6.90 per cent to 7.10 per cent on Saturday, last week, as the market continued to remain flushed with liquidity. A dealer said, "Even during the other days of the week the rates were lower and there was ample liquidity."

Even this week the market will be the same. The liquidity condition may be even easier on the back of huge inflows due to the redemption of government securities. The total inflow on account of redemption and coupon payments on government securities is estimated in excess of Rs 5,700 crore.

Dealers said lower demand and fluid money market will keep the overnight rates below the 7 per cent level for most part of the week.

The treasury head of a private sector bank said, "This reporting fortnight, one may even see some stray deals happening at 6.50 per cent."

There may not be any auction of government securities as well, which could put pressure on the liquidity. A primary dealer said, "The Centre has just placed Rs 4,000 crore of paper with the Reserve Bank of India (RBI) and hence is unlikely to conduct any auction this week."

He, however, added that the huge redemption may put pressure on the central bank to conduct auction in the next week. Dealers said the market is capable to accommodate another Rs 4,000 crore of auction.