Channel V Tries A New Beat

MONEY MARKET REPORT

Interest rates in the overnight call money market dipped further yesterday as the liquidity position continued to be easy. Call rates fell to eight per cent, with some deals reported even below this level.

"Call money rates have fallen to the easy levels witnessed a fortnight ago. There have been substantial inflows of around Rs 4,000 crore this fortnight, considerably easing the liquidity situation," said a dealer.

According to money market dealers, there was also a chance that primary dealers were paying their refinance amounts in this period. The Reserve Bank of India (RBI) has also been conducting aggressive open market operations in order to suck out excess liquidity.

 

The 11.15 per cent 2002 government paper, put on the window last Friday, has managed to suck out Rs 550 crore. The 11 per cent 2002 paper was put for open market operations yesterday.

"We will be expecting more of these open market operations as the central bank seems keen to ensure that the market does not heat up. The announcement of the auction of the 10-year government paper has not come as a surprise to the market," said market dealers.

Call rates opened at 8.25 per cent in the morning but rapidly came down to 8.05-8.10 per cent where most of the deals during the day were made. LE>