Call Rates Leap To 8.5% As Market Sees Heavy India Bond

The redemption of India Development Bonds (IDB) due on Saturday had an indirect impact on the call money market which touched a high of 8.5 per cent yesterday.

Almost 50 per cent of the remaining IDBs worth $1.8 billion is likely to be redeemed in rupees on February 15. On January 15, $418 million worth IDBs was due for redemption. Of this, $231 million was redeemed in rupees.

Analysts said that the State Bank of India (SBI) had entered the market in anticipation of the heavy redemption in rupees. Call rates shot up to 8.5 per cent before settling down to 7.5 per cent, largely due to SBI borrowing ahead of the redemptions due on Saturday,