Calls In 6.55-6.75% Range, Liquidity Props Gilts

Call money rates remained in the range of 6.55 per cent to 6.75 per cent today, despite the demand being slightly higher. Government security prices rose by 45-50 paise at the medium-to-long end of the market due to ample liquidity in the system.

Government security prices opened 5-10 paise lower today compared with Friday's close due to the concern over the state loan auction. The prices, however, kept on moving, supported by the liquidity condition closing. Dealers, however, said the rally was more in the case of illiquid papers compared to liquid ones.

In the call money market, ample liquidity helped overnight rates to remain soft. Call rates opened in the range of 6.60 per cent to 6.75 per cent, and stayed in this range for most part of the day. However, it closed slightly lower in the range of 6.55 per cent to 6.65 per cent.

 

A dealer with a foreign bank, said: "Today being the first day of the reporting fortnight, the demand was slightly higher in the overnight market. However, the market saw liquidity as the Reserve Bank of India (RBI) mopped up dollars through the public sector banks. This kept the call rates down despite the state auction."

The treasury head of a private sector bank earlier said: "In the absence of dollar-buying by public sector banks, the overnight rates could be more than seven per cent level."

The RBI today received four bids of Rs 215 crore in its one-day repo auction. The central bank accepted all the bids at a cut-off rate of 6.50 per cent. However, there was no bid in the one-day reverse repo auction.

Government security prices are likely to go up by 20-25 paise tomorrow at the medium-to-long end of the market due to the easy liquidity in the market. Call money rates are likely to hover in the range of 6.50 per cent to 6.80 per cent.