Call Rates Remain At Lower Levels

MONEY MARKET REPORT

Interest rates in the inter-bank overnight money market ruled in the narrow band of 0.25 per cent to 0.50 per cent.

There were hardly any borrowers in the market and with reporting Friday around the corner the rates will remain at this level today. With the call rates ruling easy, the banks have preferred to split their deployment of temporary surpluses between the overnight money market and the Reserve Bank. The cut-off rate at the repos auction yesterday was 4.75 per cent and the RBI mopped up over Rs 3,500 crore. This suggests that there is excess liquidity in banking system.

 

There was a lot of activity in the T-bills segment with one of the insurance companies reportedly buying in large chunks. The activity hasbeen spurred on account of the low call rates. The yields on the 364-day T-bills have crashed by over 40 basis points and 364-day T-bills maturing next April were traded at 9.10 per cent. The securities prices continued their upward march.Price of the 12.14 per cent 2000 moved up to trade at a premium of over 50 paise. The price of the 13.85 per cent 2001 went up to Rs 105, the 12.69 per cent 2002 to Rs 101 and the 11.64 per cent 2000 to Rs 99.35.