Calls Remain Low, May Firm Up Today

Rates in the inter-bank call money market fluctuated between 2 per cent and 3 per cent yesterday.

Most banks were reported to be fund-flushed due to the recent 0.5 percentage point cut in cash reserve ratio requirements. This had injected approximately Rs 2,000 crore into the banking system.

With the RBI fixing a cut-off rate of four per cent at the four-day repos auction, rates in the call money market may tighten marginally. They could firm up to 4 per cent today and move in a range of four per cent to five per cent. The prices of a few securities fell, perhaps as a reaction to the new cut-off rate on repos announced by the RBI. The demand for securities was moderate. The price of the zero-coupon 2000 paper dipped from Rs 62.88 to Rs 62.75. It is felt that the cut-off yield on the 91-day T-bill will not come down any further. It had slipped to 6.94 on Friday last.

The yields should stabilise marginally due to the new-cut off, a dealer in the market said. A large quantity of paper was reported to be put in by institutions which are usually capable of lending the money even on a reporting Friday. Other lending banks are reported to have put in money into the RBI auction.