Calls Stay Tight, Brisk Trading In Gilts

The overnight money rates remained locked in a narrow groove of 10.80 per cent to 10.90 per cent yesterday.

Though the bulk of the deals were struck in this range, bankers said a few of them were conducted even at 10.60 per cent. The day saw an outflow of Rs 1,250 crore towards the fourth installment of the 13.85-per cent 2006 paper. The payment was due today. Bankers, on the other hand, were credited with the view that the tightness was caused by the outgos on account of advance tax payments. "The tax out flows from the banking system are keeping the calls in higher band," a treasury head with a foreign bank said. All the same, bankers said the rates would not breach the 11-per cent mark. "There is a strong resistance at 11 per cent because of export refinance is available to banks at this rate," an official with a private bank said.

 

Rumours of a CRR cut were still floating in the money market. Treasury heads said they expect the Reserve Bank to pare the CRR by 1 percentage point. A few players in the debt market expressed surprised at the high call rates towards the end of the fortnight. He added that the tax and the interest outflows had been discounted by banks.