Calls Rule In 0.1-0.25% Band

Interest rates in the inter-bank overnight money market continued to rule in the 0.10 per cent to 0.25 per cent band. Call money rates could marginally firm up from today onwards on account of two factors. While the repo auction held yesterday will suck out Rs 4,130 crore, there will also be an outflow today of Rs 3,000 crore on account of the auction of the 10-year paper held yesterday. However the rise in call rates are not expected to be significant.

The RBI has brought down the cut off rate at the repos auction from 5 per cent to 2.90 per cent and has been mopping only a portion of the bids tendered by the banks. Consequently the call money market has been flush with liquidity and the rates have ruled low.

There was not much activity in the treasury bills segment. This, despite the fact that interest rates in the call money market are ruling easy. While the securities market was dull, there was some selling pressure among shorter-dated paper. On account of the selling pressure there was a marginal reduction in the prices of securities maturing between 1997-2000

Money market dealers pointed out that there were hardly any sellers of long-dated paper.