The Hindu Business Line : Call rates rise to over 6%

The inter-bank call rates rose to 6 per cent — between RBI’s signal rates of repo and reverse repo — on Monday, the first trading day after the 50 basis point hike in CRR came into effect on August 4.

The call closed at 6-6.10 per cent higher than the previous close of 2- 2.25 per cent. The rates have been hovering below 1 per cent levels for the past few weeks, due to surplus cash in the system.

The hike in CRR has drained the banking system of about Rs 15,000-16,000 crore. Dealers however do not anticipate the rates to go up further immediately.

“With the liquidity being quite comfortable even after the hike in CRR, call rates are not expected to move up sharply,” said Mr M. Natarajan, Vice-President and Head-Trading, FX, Fixed Income and Derivatives, IndusInd Bank.

The central bank’s intervention in the forex market to curb the appreciation of rupee will also help in maintaining comfortable liquidity, feel some market participants.

The Reserve Bank of India has done away with its second Liquidity Adjustment Facility to make banks more proactive and to enable them to manage their inflows and outflows more efficiently. In the first one-day reverse repo auction, RBI received and accepted 28 bids for Rs 52,070 crore. “The bids received through reverse repo is way above the market expectations and it shows the surplus cash in the system,” said the Head of Money Markets with a private bank.

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More Stories on : Short Term Instruments | CRR & Bank Rates | Debt Market

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