Call rates today dipped to close at 5.75-6.00 per cent as against the previous close of 6.00-6.10 per cent on the back of abundant liquidity in the banking system. Prices of medium-tenor government securities fell by around 20 paise with sentiment in the market being depressed. Call rates, which touched a high of 6.20 per cent and a low of 5.50 per cent, opened today around 6.10-6.20 per cent.
Ample liquidity in the banking system can be gauged from the fact that the Reserve Bank of India (RBI) received six bids amounting to Rs 14,070 crore in the one-day repo auction under the liquidity adjustment facility. It accepted the six bids partially for Rs 12,663 crore at the cut-off rate of six per cent.
Further adding to the liquidity overhang is the unavailed of export finance to the tune of around Rs 8,000 crore. Net inflows into the banking system today amounted to Rs 63 crore. While inflows stood at Rs 12,726 crore, the outflows were at Rs 12,663 crore.
Prices of government securities were dragged down on account of inflation edging up to 1.87 per cent in the week ended June 8 as against 1.5 per cent in the previous week on quarter-end considerations whereby banks do not want to hold positions (as any appreciation is ignored and depreciation has to be provided for), and the uncertainty about the US Fed