364-Day Bill Yield Dips 52 Basis Pts

In a clear signal to banks to push down interest rates, the RBI accepted only four bids out of 54 it had received. Dealers said many banks had bid but could not get the paper at the rates they quoted.

The cut-off price of the 364-day bill stood at Rs 89.21 and the weighted average price of the paper stood at Rs 89.23. DFHI quoted buy and sell yields of 12.25 per cent and 11.90 per cent, respectively, in the secondary market for the one-year paper yesterday.

Dealers said now the yield on the 91-day paper would move up. "This would be in line with the policy measures of the RBI which has cut CRR by 2 percentage points," a securities markets delear said. There was a rush for the paper and dealers were disappointed with the yield being offered. A dealer said, "this moral suasion will not work for long." The delears felt that in case they were forced to purchase the paper at low yields they might just keep away from the auctions in the future.