Meanwhile, the RBI mopped up large volume of funds through its reverse repo route yesterday.
Call rates opened at 8.10-8.25 per cent levels and stayed between 8.25-8.30 per cent for the day. Liquidity continues to be ample in the market with the RBI sucking out a total of Rs 4,655 crore through its one-day repo as well as its newly-introduced four-day and seven-day repo, respectively.
Call rates are expected to tighten today because of the higher rate of 10 per cent signaled by the RBI through its reverse repo auctions.
"If the central bank continues to suck out liquidity, the call rates are likely to move up to 10 per cent levels," said a dealer.
Security prices continued to weaken yesterday due to the volatility in the spot rupee. The 12.5 per cent paper maturing in 2004 fell by 30 paise during intra-day trade from Rs 104.85 to Rs 104.55. It, however, recovered later to Rs 104.65 levels.
Volumes continue to remain low in the market as buyers stay away due to the fact that most participants do not want to take on extra securities at a time when the RBI at any moment could clamp down on liquidity.
At the same time, sellers, who have been saddled not want to sell their securities at the current low prices and book heavy losses. "Thus both buyers and sellers are staying away from the market and volumes have fallen. They are unlikely to return to the market in this current weak scenario," said a dealer.