Call Rates Stay Below 2.5 Per Cent

Rates in the inter-bank call money markets continued to rule between 1.5 per cent and 2.5 per cent yesterday. With ample liquidity in the banking system at present, dealers said trading in the government securities would remain high.

The yield on the 91-day paper touched the years low of 6.94 per cent from the previous weeks figure of 8.86 per cent.

The drop in yields was an amazing 192 basis points compared with the previous decline of 121 basis points at the October 25 auction. Dealers reported brisk trading in the government securities market owing to the low rates in the call money markets. Prices of most securities increased. The yield on the zero-coupon 1999 bond, which was dealt in large numbers, fell to 12.64 per cent from the previous days figure of 12.88 per cent.

 

With a second cut in CRR requirements of banks due on November 9, calls are likely to rule easy for some time. After the reduction, the CRR will stand at 11 per cent.

Trading in the commercial paper (CP) market was also looking up. Many corporates are evincing interest in raising funds through the CP route.