Overnight Tags In 6% Groove

MONEY MARKET REPORT

The interest rate in the overnight inter-bank money market opened in the region of 6-6.10 per cent and ruled between 5.90-6.10 per cent. The overnight rate closed at around 5.75-6 per cent.

The weighted average call rate of the Securities and Trading Corporation of India was 5.93 per cent yesterday on a turnover of 1,100 crore.

The Reuters Mior (Mumbai Inter-bank Overnight Rate) was 6.01 per cent and the Mibor was 6 per cent .At the three day fixed rate repos, the RBI received and accepted three bids for Rs 2,300 crore. On the inflows side, there was around Rs 4,500 crore coming into the system on account of repo reversals.

The ceiling set by the present export refinance rate of 7 per cent has provided an arbitrage opportunity to banks, which are borrowing at call rate and investing in short dated (three-six months) instruments. As a result yields in these instruments have fallen considerably in the secondary market.

There was also a three-five paise rise in prices of government securities yesterday.

The 11.55 per cent 2001 was traded at Rs 100.33-34, the 11.68 per cent 2002 at Rs 100.30-31 and the 13.65 per cent 1999 at Rs 102.25. Among longer term gilts, the 13.05 per cent 2007 was traded at Rs 104.95 or an yield of 12.04 per cent.

In the treasury bills segment, the t-bills maturing on October 9 was traded at 7.20 per cent.