Call dips on good liquidity, Re flat

MONEY MARKET ROUND-UP

Overnight money rate ended down today because liquidity in the banking system continued to be surplus, according to dealers.

The one-day call rate ended 5.90-6.00 per cent compared with 6.40-6.50 per cent on Tuesday. "Cash supply is absolutely not an issue and banks were easily able to garner funds necessary to maintain reserve needs," said a dealer at a state-run bank.

For a second consecutive day, the Reserve Bank of India (RBI) drained more than Rs 70,000 crore through its reverse repo operation, an indication of the surfeit cash supply.

Banks parked Rs 73,300 crore at RBI's reverse repo tender, marginally lower from Rs 79,000 crore on Tuesday.

Rupee: Closes flat
The rupee ended flat today after moving in a narrow range as the dollar demand and supply from companies offset each other. The Indian unit ended at 39.9950 to a dollar compared with 40.0000 on Tuesday.

The rupee moved in a mere 5-paise range today evincing little interest from major market participants. Markets are within a narrow range as there are two-way flows, said Rohan Lasrado, head of interest rate trading, HDFC Bank. Most traders are on staying on the sidelines, he said.

Banks also avoided large positions ahead of the Reserve Bank of India's annual monetary policy statement for 2008-09 (Apr-Mar) on April 29.  Among the dollar buyers today, three large state-run oil companies were said to be buying to the tune of $400 million, dealers said.  G-sec: Bullish mood
Government bond (G-sec) prices ended up today as investors made purchases, buoyed by the ample liquidity situation, dealers said.  For the second consecutive day today, Reserve Bank of India drained more than Rs 70,000 crore through its reverse repo tender, an indicator of the ample liquidity situation.  The 10-year benchmark 7.99 per cent, 2017 paper ended at Rs 100.43 or 7.9198 per cent yield-to-maturity today, after moving in a narrow band of 14 paise.  The 2017 paper ended at Rs 100.35 or 7.9329 per cent on Tuesday.  Surplus liquidity with banks also helped the long-tenure bond prices to rise.  The 8.33 per cent, 2036 paper ended 64 paise up at Rs 97.84 or 5.319 per cent, compared with Rs 97.20 or 5.5936 per cent yield on Tuesday.  However, concerns that Reserve Bank of India may take monetary tightening measures like increasing the banks' cash reserve ratio capped further gains, dealers said.