Weekly Money Market Report : 06th Nov - 10th Nov

The call rates have opened high compared to the last week, touched a high of 11.5% and closed at the opened levels. The call rates opened at around 9.75-10.25 percent and ended at 10-10.25 percent. The entire week faced the demand surplus to supply leading in firming up the call rates. In the last part of the week, the rates stabilized with the good response to IMD collecting $5.2 bn. Bond prices too rallied the whole week almost everyday. There were expectations of a cut in the reverse repo rate. However, after the liquidity adjustment facility (LAF) results were out and the RBI maintained at same level, the rates went up. The detailed report follows:

Friday, 10th November

Call rates ended lower at 10 - 10.25%, amid inflows of Rs.6,755 crore from reverse repos by the RBI. The rates opened at 11.5 - 12% as against its previous close of 10.5 - 11%. Call rates ruled higher initially as players expected tighter liquidity conditions. RBI has announced the re-issue of 11,03% 2012 bond for a notified amount of Rs.4,000 crore on Monday. RBI accepted all the 63 bids for Rs.6,775 crore at the reverse repo auction and maintained the cut off rate at 10%. Following the infusion of fresh funds, the call rates came down and touched an intra day low of 10%. The call rates were high in the morning deals on account of outflows towards the OMO sales of the RBI. The RBI removed 11.43% 2015 bond from its OMO sales list. The securities which remained the OMO window were 11.75% 2006 and 11.9% 2007. Bond prices ended higher by 5 - 10 ps amid buying interest from players.  

Thursday, 9th November

Call rates ended lower at 10.5 - 11%, amid infusion of Rs.5,880 crore by RBI through reverse repos on Thursday. The rates opened at 11 - 11.5% as against the previous close of 11.25 - 11.5%. The call rates were high in the morning on account of outflows towards the OMO sales of the RBI.  However, inflows through reverse repos brought the rates down. The call rates touched an intra day high of 12.5% on heavy demand for funds.  The open market sales of securities by the RBI has sucked out around Rs.8,000 crore from the system. RBI has placed 11.75% 2006, 11.9% 2007 and 11.43% 2015 bonds for sales to banks and primary dealers to mop up the inflows coming from collections by the SBIs IMD, which collected 5.2 billion dollar (Rs.24,232 crore). RBI accepted 60 bids totaling Rs.5,880 crore out of 61 bids for Rs.5,890 crore for its reverse repo auction at a cut off rate of 10%. Bond prices ended higher by 10 - 15 paise amid buying interest from players. The 11.4% 2008 bond ended at Rs.101.47 (101.43). The 11.03% 2012 bond ended at Rs.97.45 (97.33) while the 12.5% 2004 bond ended at 105.63 (105.55).

Wednesday, 8th November

Call rates ended higher at 11.25-11.5%, amid higher demand for funds. The rates opened at 10.25-10.4% as against previous close of 9.75 - 10%. There were expectations of a cut in the reverse repo rate. However, after the liquidity adjustment facility (LAF) results were out and the RBI maintained at same level, the rates went up.  The call rates touched an intra day high of 11.5%. RBI did not receive any bids for the one and five day repos.  For the reverse repo auction it accepted all the 37 bids received for Rs.3,445 crore.  The cut off for reverse repos was maintained at 10%.

Tuesday, 7th November

Call money rates ended steady at 9.75 - 10 percent, amid expectations of a surge in the liquidity. The rates opened higher at 10.25 - 10.75% compared to the previous close of 9.75 - 10.25%. Players borrowed in the morning session, on liquidity concerns following outflows for the 11.99 percent 2009 bond, which was auctioned on Monday. Later, the rates stabilized on expectations of good response to IMD. Bond prices rallied by 30 - 35 paise on anticipation of inflows towards the IMD.

Monday, 6th November

Call rates ended higher at 9.75 - 10.25 percent, amid higher demand for funds ahead of the 9 year bond auction. The rates opened at 10 - 10.25 percent, slightly higher compared to the previous close of 9.5 - 10%.  There was mismatch in demand and supply of funds which lead call money rates to firm up. Bond prices rallied by 10-20 paise on anticipation of large inflows towards the IMD of SBI. The 11.4% 2008 bond ended at Rs.101 (100.80). The 11.03% 2012 bond ended at Rs.96.8 (96.65).

K.Venu Babu