Calls Slid To 4.25% On Easy Liquidity

MONEY MARKET REPORT

Call rates dropped to below 4.25 per cent in the inter-bank money market yesterday. Trading remained dull as liquidity is said to be ample. The repo auction on Saturday wasn't much of a success as only Rs 500 crore was sucked out of the system. The auction which was reversed resulted in Rs 1,400 crore coming into the system. This has led to a net inflow of Rs 900 crore.

Moreover, there has been a dip in the ad hocs level with the government. Dealers say that this has occurred as several banks have put money in on tap treasury bills.

The rates opened at 6.5 to 6.75 per cent. However, the borrowers waited for lower levels and came in when the rates ruled between 6 per cent and 5.5 per cent. Most deals were struck in this range. However, the volumes were not high and rates fell further till they reached the close levels of 4.25 per cent.

Transactions remained dull with most of the interest being expressed in the near-end papers. In the repos segment, the May 3, 1997, 91-day treasury bill was traded for Rs 25 crore at Rs 98.43 at a repo rate of 5.5 per cent. Treasury bills maturing on March 1, 8, and 15 next saw trading volumes of Rs 25 crore, Rs 20 crore, and Rs 20 crore, respectively.

The 13.4 per cent 1999 paper saw trading volumes of Rs 20 crore at Rs 101.5 at 12.7 per cent. The 13.5 per cent 1998 (Conversion) paper saw volumes of Rs 19 crore at Rs 102.9 at 10.7 per cent.

The zero coupon 1999 bond and the 14 per cent 2005 papers both saw volumes of Rs 11 crore each. The other securities with notable volumes were the zero coupon 2000 and the 13.85 per cent 2006 papers with volumes of Rs 10 crore each.