Call Rates Hover Around 6%

MONEY MARKET REPORT

The interest rates in the inter-bank overnight money market opened at a higher level of 6.50 per cent. Yesterday the call rates ruled in the band of 5.75 per cent to 7 per cent. Money market dealers said that most of the deals were struck in the region of 6.25 per cent to 6.50 per cent. At the repos auction, the RBI mopped up Rs 4,800 crore at the cut off rate of 4.15 per cent.

There was a lot of activity in the treasury bills segment. There were two buyers in the market, a Mumbai-based financial institution and a North-based public sector bank. They bought 364-day T-bills maturing between April and June next year at yields in the region of 9 per cent. While there was abundant supply of T-bills maturing in April, this was not the case with T-bills maturing in June. The increase in the call rates implied that there was hardly any buying interest in the 14-day treasury bills. If the call rates do not decline then some of the primary dealers could be stuck with paper that they subscribed to at the auctions as well as the portion that devolved on them. While the securities market was relatively active, there was significant changes in the price of some of the securities during the course of the day.