Overnights Move In 7.5-8.5% Range

MONEY MARKET REPORT

The call money rates moved in the range of 7.5 per cent to 8.5 per cent yesterday even when it was a reporting Friday for bank's product. The call money rates opened at a higher level of 8.5 per cent and gradually declined at 7.5 per cent during the close of the day. Most deals were struck at 7.75 per cent to 8 per cent, said dealers.

The call rate was high of tight on Wednesday as well at 8 to 8.5 per cent. "The institutions and large banks were quoting higher rate during the early hours, but eventually as the demand dried out the rate fell below the 8 per cent barrier," said a dealer.

 

Dealers said that high rates was quite unusual since traditionally it been at around bank rate or even lower on the reporting Friday. The three day call money rate was traded at around 8.5 per cent. Most banks had availed the second level of refinance facility, leading to tight liquidity conditions.

The call money rate is expected to be around 9 per cent today- the first day of the new fortnight, said dealer. In securities market, dealers said that it was yet another dull trading day. Prices of government securities moved in the range of 5 to 10 paise. Dull trading in secondary market is expected to continue due high call rates.

The day saw thin trading volume even in the term money market. The three months term money was traded in the range of 9.25 per cent to 9.75 per cent, said dealers. In the meanwhile, RBI has placed 10.79 per cent government stock maturing on 2015 on the on tap sale window.

Dealers said that Life Insurance Corporate might have brought huge stock since the institution prefers investing in longer tenure stock. It was also found selling other gilts which may be aimed at buying the stock on tap.