Weekly Money Market Report : Jan 22nd - 26th

The call money rates witnessed almost a flat trend though ended with a marginal fall in the week. The rates opened at 9.9 -10.10 percent and ended at 9-9.5 percent. Liquidity support came from the infusion of Rs.1,395 crore by the RBI through reverse repos, coupon payments and redemption of treasury bills. The liquidity conditions were getting tight after the tier I refinance of Rs.10,324 crore was fully drawn. There were expectations of easy interest rates and hopes of the RBI viewing some monetary measures taken last year. The detailed report follows:

Friday, 26th January, 2001

Holiday

Thursday, 25th January, 2001

Call rates ended lower due to scaled down demand for funds as most banks had covered their reserve needs for the reporting cycle. Call rates closed around 9-9.5%, lower from previous close of 9.7-9.8% after opening at 9.5-9.75%. There was limited demand as most participants had covered their reserve needs ahead of the reporting day. Banks report their reserves position to RBI every alternate Friday and keep 8.5% in the form of cash reserves for the next two week reporting period. The currently fortnightly reporting cycle ends on Thursday. RBI infused around Rs.1,100 crore into the system through the four day repurchase of securities(repos) agreement auction at a cut off rate of 10%. Meanwhile, the secondary market for securities turned subdued and met with profit selling.

Wednesday, 24th January, 2001

A comfortable conditions were witnessed at the call money market owing to adequate liquidity in the system to meet the scaled down demand for funds ahead of the reporting day on Thursday as most banks had covered their reserve needs. Call rates closed around 9.7-9.8% lower from Tuesday's close of 9.8-10% after opening around 9.8-9.9% and traded in a narrow band of 9.7-10 % and most of the transactions were done in the region of 9.8-9.9%. Demand for funds was at a low ebb, as most participants had covered their reserve needs. Banks report their reserves positions to RBI every alternate Friday and keep 8.5% in the form of cash reserves for the next two week reporting period. RBI infused around Rs.270 crore into the system through the reverse repos agreement of auction on a cut off rate of 10%. 

Tuesday, 23rd January, 2001

Call money rates ended steady at 9.75-10 per cent amid good supplies meeting the demand for funds. The rates opened at 9.9-10.10 per cent as against the previous close of 9.75 - 10 per cent. The RBI infused Rs.1,195 crore by accepting 7 bids out of 8 bids received for Rs.1,205 crore. Call rates ruled around 10% on heavy demand to cover positions ahead of reporting Thursday. Banks have to disclose their two-weekly balances to RBI on alternate Fridays. Call rates ruled around 10% amid liquidity conditions getting tight after the tier I refinance of Rs.10,324 crore was fully drawn. Bond prices ended higher by 10-15 paise amid expectations of easy interest rates and hopes of the RBI reviewing some monetary measures taken last year. The 11.03% 2012 bond ended at Rs.103.25 (103.10), the 11.4% 2008 bond ended 106.20(106.08) and the 11.43% 2015 bond at 105(104.90). The rupee's firmness in the forex market also aided sentiments in the bond market.

Monday, 22nd January, 2001

Call money rates ended steady at 9.75 - 10 per cent with good supplies meeting the demand for funds. The rates opened at 9.9-10.10% as against previous close of 9.75-10%. Liquidity support came from the infusion of Rs.1,395 crore by the RBI through reverse repos, coupon payments and redemption of treasury bills. For the one day reverse repo auction, the RBI received 16 bids for Rs.1,405 crore and accepted 15 bids for Rs.1,395 crore at a cut off rate of 10%. Bond prices rallied, amid expectations of easy interest rates and hopes of the RBI viewing some monetary measures taken last year. Call rates ruled above 10%, amid liquidity conditions getting tighter after the tier I refinance of Rs.10,324 crore was fully drawn. The amount of outstanding reverse repos is Rs.2,550 crore. Bond prices rose by 30 paise in the long end and by 20-25 paise for the shorter tenor. The 11.3% 2010 bond ended at Rs.105.10(104.75) and the 11.03% 2012 bond at Rs.103.20(102.85).

K.Venu Babu