Call Money Rates Eases A Bit And Closes At 13.75%

Call money rates opened around 14.25 per cent to 14.50 per cent yesterday. Dealers said the rates were range-bound in the morning hours. The rates, however, came down after Reserve Bank of India (RBI) has lowered the cut-off rates in the daily repo auction. A dealer said, "As expected, RBI had slashed the repo rates which pushed down the call rates in the afternoon trades."

"The liquidity situation was easier as the mopped amount, by the repo auctions was also lower," he added.

The apex bank mopped up Rs 1,905 crore through the repo auction. The central bank, while mopping up Rs 350 crore through its one day repo auction at a cut-off rate of 14.25 per cent, has taken out another Rs 1,555 crore through the six-day repo at a cut-off rate of 14.50 per cent. RBI conducted one day reverse repo auction along with the repo auctions. The central bank accepted one bid for Rs 25 crore at the cut-off rate of 15 per cent.

Government security prices opened weaker in the morning hours ahead of the auction of eight year government paper. "The proposed auction had kept the sentiment nervous in the market", said a dealer with a private sector bank. Dealers said the prices fell by 15-20 paise in the morning hours. However, the lower repo rate had improved the situtaion a bit in the gilts market as well. "The gilts prices have recoverd the initial fall following the repo rate", said the treasury head of a private sector bank. Prices closed marginally lower than the Tuesday's level at the end of the day.

Dealers expect the call rates to come down further. A dealer said, "As the rupee gets stabilised, RBI may reduce the repo rates further which will push down the call rates. However, the fall in the rates in the call market is not likely to be substantial. RBI is likely to be cautious while bringing down the repo rates.". The government security market is expected to remain calm with some short upward rally today.