The yield on the government bonds eased substantially on an improvement in liquidity and expectation of moderation in inflation.
The yield on the benchmark 10-year government paper (8.24 per cent 2018) at the close of day was 8.77 per cent as against 8.88 per cent yesterday. The turnover in bonds was Rs 7,930 crore. The top traded securities were 8.24 per cent GOI 2018 and 8.24 per cent GOI 2027, with turnover of Rs 4,615 crore and Rs 2,305 crore respectively.
The liquidity was comfortable. After days of tight liquidity and infusions by the Reserve Bank of India, there was no infusion under Liquidity Adjustment Facility Repo operation today. RBI absorbed
Rs 1,000 crore under LAF reverse repo operation, dealer with IDBI Gilts said.
Calls: End lower
The call money rates ended below 7 per cent today as demand came down sharply, leaving lenders with surplus funds.
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The one-day call rate ended at 6.50-6.75 per cent, down from Wednesday’s close of 8.00-8.30 per cent. The call rate touched a low of 6.50 per cent in the day. Lenders with surplus funds were forced to lend below 7 per cent.
The demand was weak because banks covered most of their reserve needs in the first week of the current Reporting Fortnight. Call rates also fell also due to improved liquidity.
Rupee: Marginally down
The rupee ended at 43.78 compared with 43.75 on Wednesday. However, it was stuck in a thin band for a large part of the session with banks refraining from buying the greenback on fear that Reserve Bank of India may prevent a sharp fall in the Indian unit.
The RBI is believed to have bought the greenback persistently since Tuesday after it fell to an over 17-month low of 44.15.