Reporting Friday Blues Strangle Call, Gilts Stable

Call rates were in the 6.75-9 per cent range today as compared with yesterday's 8-9 per cent range. Government security prices remained stable amidst 5-10 paise volatility across the maturity.

Call rates today opened around 9 per cent in the morning. Overnight rates, however, came down gradually during the day to slip below the bank rate of seven per cent.

Said a dealer, "Rates were high in the morning. But the demand came down sharply, today being the reporting Friday, as most of the banks were already well covered. This resulted in call rates settling below seven per cent."

The Reserve Bank (RBI) today received no bid for its one-day repo auction. The central bank, however, received 19 bids of Rs 2,765 crore of which the apex bank accepted 16 bids of Rs 2,735 crore at a cut-off rate of 8.50 per cent.

A dealer with a private sector bank said, "The reverse repo inflow also helped overnights to soften during the day."

Government security prices went up in the morning by 5-10 paise in the morning. Prices, however, came down later to close around yesterday's level amidst very low trading volume.

The treasury head of a private sector bank said, "Players were not ready to take any position before the credit policy on Monday. Though, there may not be any major policy announcement, dealers remained cautious and stayed on the sidelines."

Call rates are likely to remain in the 7-7.50 per cent range tomorrow. Said a dealer with a private sector bank, "The rates went high in the beginning of the week because of insufficient cover for cash reserve ratio requirements. The situation is not the same any more so overnights are likely to come down and stay around the seven per cent level." In the government security market trading will remain thin and the prices range-bound on the eve of the credit policy announcement.