Outlook : Money Markets

Liquidity will be easy this week though in the second half there may be an auction of government securities worth Rs 8,000 crore.

The Reserve Bank of India (RBI) is not expected to conduct open market operations this week. Dollar inflows will continue to be the main source of liquidity in the banking system. As the central bank does not want the rupee to appreciate sharply, it will continue to mop up the excess greenbacks, and by default, release rupees into the system.

The funds-flush public sector banks are expected to continue bidding heavily at repo auctions. Money market dealers said the repo bids are likely to be worth Rs 20,000 crore to Rs 25,000 crore during this week.

Strong coupon inflows will add more comfort....

The week starts with a big inflow of Rs 2,058 crore on Monday on account of coupon payments on the 11 per cent 2006, the 11.30 per cent 2010, the 12.29 per cent 2010 and the 12.32 per cent 2011 securities.

An auction of a 91-day treasury bill will take out Rs 250 crore from the system, only to be matched by an inflow through the redemption of another 91-day treasury bill.

As per the RBI calendar, there will be auction of Rs 8,000 crore