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MUMBAI

: A day after the RBI announced a 25 basis point hike in reverse repo and repo rates, call rates soared to over 8 per cent on Wednesday due to liquidity tightness.

It moved up to a high of 8.25 per cent and closed between 7.75 per cent and 8 per cent. It had crossed 8 per cent in the last week of December when the India Millennium Deposits were due for redemption, said dealers.

The rupee appreciated against the dollar tracking the gains made by other major currencies and buoyed by the rise in the domestic market. It opened at 44.36 and rose throughout the day to close at 44.17/18, up from Tuesday's 44.26/27.

In the forward premia market, there was a further rise due to the hike in the reverse-repo and repo rates. The six-month premium closed at 2.49 per cent (2.3 per cent) and the 12-month ended at (1.82 per cent) 1.92 per cent.

Bond prices continued with their downward movement, as there was no clear signal from the RBI about solving the liquidity crunch. Prices fell by as much as Rs 1.5 in intra-day trade.The 10-year yield was at 7.38 per cent (7.21/7.22 per cent).

The 8.07 per cent-11-year 2017 paper opened at Rs 105.60 (7.32 per cent YTM) and closed at Rs 104.60 (7.45 per cent YTM), down by almost Rs 2 against Tuesday's level of Rs 106.635 (7.31 per cent YTM).

The 9.39 per cent-5-year-2011 paper opened at Rs 111.36 (6.85 per cent YTM) and ended trade at Rs 110.7 (6.99 per cent YTM) against the earlier level of Rs 111.40 (6.84 per cent YTM).

In the first one-day reverse-repo, the RBI received one bid for Rs 30 crore at 5.5 per cent and 41 bids for Rs 19,310 crore in the repo auction for 6.5 per cent. In the second one-day reverse-repo auction, it received two bids for Rs 350 crore and 17 bids for Rs 4,135 crore in the repo auction.

In the CBLO market, there were 309 trades for Rs 14,323.25 crore in the rate range of 6.2-6.6 per cent.

(This article was published in the Business Line print edition dated January 26, 2006)
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