Calls Harden On Repos Outflow

MONEY MARKET REPORT

Interest rates in the inter-bank overnight money market opened at a higher level of nine per cent yesterday. The outflow of Rs 4,800 crore at the repos auction on Monday reduced the extent of liquidity in the banking system and the call rates hardened to ruled in the band of seven per cent to nine per cent against 5.75 per cent to seven per cent on Monday.

The Reserve Bank of India (RBI) had mopped up Rs 4,800 crore at the cut-off rate of 4.15 per cent. There was some fluctuation in the prices of the securities. The prices declined initially, only to recover during the course of the day. However, the news of the apex bank announcing an auction of seven-year paper to raise Rs 2,000 crore saw securities prices decline to their earlier levels.

 

The price of the 12.14 per cent 2000 first declined from Rs 100.55 to Rs 100.40, only to recover and trade at a premium of 62 paise. After the market came to know about the forthcoming auction, the price reverted back to Rs 100.50. The price of the 12.69 per cent 2002 which went up by over 15 paise touch Rs 101.25 declined by the evening to trade at figure. In spite of the calls going up, the treasury bills continued to witness some activity.

There were buyers for the 364-day treasury bills maturing between April and June next year at yields in the region of 8.90 per cent to nine per cent.