Call Rates Sink To Lower Levels

MONEY MARKET REPORT

There was hardly any activity in the call market yesterday as it was a reporting Friday.

Throughout the day, call rates ruled between 0.10 per cent and 1 per cent. According to dealers, the three-day money was quoted at 3-5 per cent yesterday. Calls are expected to be open at these levels today.

Markets, which were volatile on Thursday, did not witness any action as most of the players stayed away. No body lends or borrows on a reporting Friday, a treasury head of a private bank said.

The second tranche of the India Development Bonds amounting to $1.686 billion were released yesterday by the Reserve Bank. Out of this, $904 million of IDBs will be redeemed in dollars and equivalent of $782 m will be released in rupees.

 

This redemption will result in a net outflow of Rs 1,500 crore to Rs 1,600 crore from the banking system. This could result in a tightening of the call rates in the next fortnight, I-Sec said in its daily commentary.

On Thursday, the market witnessed a great deal of volatility with call rates touching 11 per cent after opening at 8.50 per cent. The 91-day treasury bill auction devolved on RBI reflecting the tightness of liquidity that is likely to set into the market.