Call Rates Touch Lower Levels

Yesterday being a reporting Friday, rates in the inter-bank call money market touched lower levels and moved in a narrow range of 0.25 per cent to 0.5 per cent.

The three-day money rates were quoted between 5.5 per cent and 6.5 per cent. The previous day, four-day money was quoted at 6.5 per cent.

The fourteen-day repos auction by the RBI saw a cut-off level at 5.48 per cent. Due to this, dealers said the call money rates would move between 5.5 per cent and 6 per cent during the coming week. In the securities market, little trading was reported.

 

Dealers said the prices of securities remained more or less steady.

With call rates tightening, it is felt that the banks, which had invested in the fourteen-day on-tap paper, would lend surplus funds in the call market. This is because the call market will fetch them a higher return than the 4.6 per cent which they get by investing in the on-tap paper for fourteen days.

The cut-off yield on the 91-day treasury bills stood at 7.23 per cent, which was slightly higher than 6.94 per cent witnessed earlier. The marginal correction in yield was on account of the outflow which took place due to the repos auctions.