MONEY MARKET REPORT
Interest rates in the inter-bank overnight money market opened in the region of 1-2 per cent and then shot up to the 6-6.50 per cent band by the end of the day. Initially the two-day money was dealt around 2 per cent, and the 4-day at 5 per cent.
One reason for the call rates jump in spite of yesterday being a reporting Friday was on account of the fact the State Bank of India (SBI) was absent from the market. The bank reportedly kept away from the market on account of the redemption of the FCNR(A) deposits which would entail an outflow of rupee resources from the bank.
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For the same reason the two-day money was dealt at 8 per cent also.
Market players were tentative about the impact of the redemption of the FCNR(A) deposits. The impact of the redemption should become clear on Monday and the activity in the securities market should pick up. The prices of dated securities came down marginally partially on account of selling pressure. The price of the 11.19 per cent paper maturing in 2005 fell by around 5 paise and was traded at a premium of 45-48 pasie. The price of the 12.59 per cent paper maturing in 2004 also declined by around 20 pasie from Rs 107.
Among other securities, the 10.85 per cent paper maturing in 2001 commanded a premium of around 65 paise, while the 11.83 per cent 2003 held ground in the range of Rs 103.65-70.