Sbi Fund Inflows Calm Call, Gilt Tags Plunge

Call money rates closed in the range of seven per cent to 7.10 per cent today after touching an intra-day high of 8.50 per cent. Government security prices fell by Re 1 to Rs 1.50 across all maturities on the back of the continuous fall in rupee.

Call money rates opened in the range of 8.25 per cent to 8.50 per cent and stayed there for a couple of hours. The rates, however, came down during the day as the State Bank of India (SBI) supplied liquidity at a rate of seven per cent.

Said a dealer with a private sector bank: "There was panic in the market as the rupee has been falling continuously. This pushed prices to as high as 8.50 per cent. But the situation calmed down with supply of funds from the SBI."

 

Dealers said most deals were done in the range of 7.15 per cent to 7.25 per cent.

The Reserve Bank of India (RBI) today received no bid for its one-day repo auction. It received a single bid of Rs 10 crore in the reverse repo auction, which was rejected.

Government security prices staged a sharp fall as dealers were expecting the central bank to take liquidity-tightening measures very shortly. The treasury head of a private sector bank said: "There will also be an advance tax outflow from tomorrow, which was another concern in the government securities market."

Call money rates are likely to remain high tomorrow and should rule in the 7.50-7.75 per cent range. Government security prices are expected to go down by another 10-15 paise at the medium and long end of the market.

A senior dealer said: "The forex market will remain closed tomorrow, but the uncertainty of the currency against the dollar will continue. So call rates will be high and government security prices will go down further."

"One cannot expect the SBI to lend funds at a cheap rate every day," he added.