Call Rates Firm On A Dull Trading Day

Owing to the Monday strike, clearing operations were suspended for a day, and there was hardly any transaction in the securities market.

There were lenders in the market yesterday morning, while their numbers were fewer later on in the day. On Saturday, a large amount of three-day money was transacted. The securities market was dull with not too many trades being recorded.

Owing to the Monday strike, banks were not sure of their positions, and this led to dull trading activity in the government securities' market.

Trading activity was visible in the shorter-dated securities, with maximum interest being shown in the 91-day treasury bills. It is common knowledge that when the money situation rules easy, a lot of arbitrage takes place in the 91-day paper and in the call market as most banks borrow funds from the call market to invest them in 91-day paper. A few deals were reported in the zero-coupon 1999 paper and the 12 per cent 1999 paper in yesterday's markets.

 

In the secondary market for CDs/CPs, not much activity was reported last week. At the last 91-day treasury bill auction held on September 6, competitive bids numbered 30, while three non-competitive bids were received.

It is unlikely that the cut-off yield on 91-day paper will move up from the current levels of 10 per cent, dealers said.