Excess demand in the beginning of the new reporting fortnight along with auction outflow of Rs 6,000 crore pushed up call rates to the intra-day high of 7.35 per cent.
Overnights were in the 6.90-7.15 per cent range on Saturday. Government security prices fell by 15-20 paise as rupee weakened against the greenback.
Call rates opened around 7.25-7.35 per cent in the morning, but came down gradually during the day to close in the 6.90-7 per cent range.
A dealer said, "It is a typical phenomenon on the first Monday of a reporting fortnight. Overnight rates open higher then find level depending on the liquidity available in the system."
Dealers, however, said that there was slight tightening of liquidity following the twin auction held on June 29.
The Reserve Bank of India (RBI) received a single bid of Rs 6,500 crore for its one-day repo auction. The central bank accepted the bid partially (Rs 3,250 crore) at a cut-off rate of 6.50 per cent.
Dealers said that the bid was from one of the large state-run banks. The apex bank, however, did not receive any bid for its one-day reverse repo auction.
Government security prices fell by 15-20 paise across all maturity as the local currency slipped against the greenback.
A dealer with a private sector bank said, "The sentiment was bit nervous as the rupee has shown signs of weakness."
Dealers also said that the comment by finance minister also contributed to the fall in prices. Finance minister said that the government will increase the expenditure to boost the economy.
Dealers said as this is a signal of more issuances of government bond, sentiment in the government security market weakened a bit.
Call rates are likely to be around seven per cent tomorrow on the back of surplus liquidity in the system. Movement in the government security prices will depend on rupee movement against the dollar.
