Repo Cut Cuts Gilts, Crr Cover Charge Clouds Call

Government security prices fell by 75 paise to Re 1 at the long end even though the Reserve Bank of India (RBI) cut the repo rate by 50 basis points to six per cent. In the call money market, the demand for funds to cover the cash reserve requirement of the banks forced overnight rates to close in the 6.50-6.60 per cent range.

Prices in the gilt market moved up early before the repo auction. Gilts prices kept gaining for an hour after the repo auction. But the prices across the maturity crashed afterwards as the market players resorted to profit booking.

 

A dealer with a foreign bank said,