Call Easy As Forex Stays Stable, Gilt Up

Call money rates ruled easy in the 6.75-7.10 per cent range today as the forex market turned stable while government security prices went up by 30-40 paise across all the maturities.

Call rates opened higher in the 7-7.10 per cent band and came down gradually during the day to close in the 6.75-7 per cent level. Dealers said most of the deals were done in the 6.95-7.05 per cent range.

According to a dealer with a private sector bank, the liquidity condition was good and the there was no pressure from the forex market. This made overnight rates to hover around the refinance rate of seven per cent, he said.

 

The Reserve Bank of India (RBI) today received a single bid of Rs 5,200 crore for its one-day repo auction which the central bank accepted at a cut-off rate of 6.50 per cent. There was no bid in the reverse repo auction.

The government security market continued to recover today despite second round of the US attack on Afghanistan. The recovery started yesterday after RBI governor Bimal Jalan reaffirmed the central bank's bias for softer interest rate.

The treasury head of a private bank said: "There was a little uncertainty in the early hours. As the local currency remained stable against the dollar, prices went up during the day with ample liquidity."

Call rates are likely to remain in the 6.75-7.25 per cent range tomorrow due to a stable forex market. Government security prices are also expected to improve by another 15-20 paise.

A dealer with a nationalised bank said: "With the RBI governor's statement, a section of the players feels that there will be another bank rate cut soon. The expectation are likely to drive up government securities prices, unless the forex market turned volatile once again."