Calls Hover Around 8 Per Cent

MONEY MARKET REPORT

The interest rates in the inter-bank overnight money market was hovering in the region of seven to eight per cent. Expectation that calls will come down to five per cent has been belied. The reason is that the lenders have intentionally jacked up rates and there is some resistance.

The borrowers, including the primary dealers, are in no position to bargain with the lenders and reduce the rates. Primary dealers generally borrow from calls for funding trading positions. They do not take recourse to refinance from RBI as long as the call rates rule below 11 per cent , i e the bank rate.

 

There was some buying interest expressed in 364-day T-bills since there were some sellers of the paper maturing in April next year in the band of 9.25 per cent to 9.40 per cent. This is higher than the nine per cent, offered by RBI at the auction of 364-day T-bills. Many of the public sector banks were buying this paper in small quantities.

There was not much activity in the dated securities.Market dealers said the activity was relatively calm. The recently auctioned 12.69 per cent 2002 was traded at a premium of 17 to 22 paise. Price of the 13.05 per cent 2007 continued to be in the region of Rs 100.70.