Call Closes Higher At 6.50%

MONEY MARKET REPORT

Interest rate in the interbank overnight money market opened between 6-6.10 per cent, and inched higher to rule at around 6.25-6.5 per cent yesterday. The call rate closed at around 6.50 per cent, and there were some stray deals reported at 6.75 per cent.

The tightening of the call rate was not due to a dearth of funds in the system, going by the mop up at the Reserve Bank of India (RBI) fixed rate repo yesterday. The RBI received and accepted seven bids for a sum of Rs 3,579 crore at the six per cent repo. However, there was a concentration of funds among few players, and exposure limits set by lenders saw the cost of funds go up for borrowers.

The weighted average call rate of the Securities Trading Corporation of India (STCI) was 6.14 per cent on a turnover of Rs 1,600 crore.

The dated securities segment witnessed a fall in prices by 50-60 paise across the board with all the new issues traded below par levels. The 11.5 per cent 2004 was traded in the range of Rs 99.75-100.10, the 12 per cent 2008 at Rs 99.95-100, 11.75 per cent 2006 at Rs 99.65-80 and 11.10 per cent 2003 at Rs 99. The 13.05 per cent 2007 was traded at Rs 106.07. There was heavy selling by foreign banks and a few private sector banks.

In the treasury bills segment, t-bills maturing in October were traded at 7.95 per cent and May 23 t-bills at 6 per cent.