Calls Remain Below 1 Per Cent

MONEY MARKET REPORT

The inter-bank overnight call money market continued to be awash with liquidity yesterday. As a result, the interest rates in the call market ruled in the band of 0.25 per cent to 0.50 per cent. The call rates are likely to hover around lower levels during the course of this week.

With abundant funds in the market, the secondary market yields on the treasury bills continued to remain low. The recently auctioned 364-day treasury bill was traded at 8.60 per cent. However, trading in the treasury bills segment was extremely sluggish yesterday.

The securities market did not react to the scrapping of the cash reserve ratio (CRR) and the statutory liquidity ratio (SLR) on inter-bank borrowings.

The reason is that this move was in tune with market expectations and had been discounted by the market. The scrapping of the CRR and SLR on inter-bank borrowings is likely to set right the reporting Friday anomaly when call rates slump to 0.1 per cent.

In the face of excess liquidity in the system, the prices of the securities went up by around 10 to 30 paise yesterday. The price rise was seen in the case of the shorter-dated papers as well as the medium-dated ones.