Call Rates Rule At 6 Per Cent

The call rates ruled higher at 6 per cent in the inter-bank call money yesterday. Liquidity in the market was tighter after the Reserve Bank of India managed to suck out a fair amount of liquidity in the repo auction on Saturday, February 9.

The prices of securities continued to slip as rates ruled high. Consequently, yields have been rising. This has been noticed particularly in the case of treasury bills and short and medium dated securities.

Dealers attribute the higher rates to market sentiment regarding the tighter liquidity conditions prevailing in the economy.

The Reserve Bank managed to draw out Rs 3335 crore in its latest repo auction.

 

This has led to expectations of tightness and many banks sought to cover their positions early in the week before rates go higher as the end of the fortnight approaches.

This saw rates open at four per cent and then rise in the course of the day to five per cent. Most deals were struck between these rates.

Trading volumes in securities were thin. The rates of returns on most securities at 11 per cent are higher than the prevailing call rates. Hence, security holders are not willing to sell their papers.