Call money rates hovered in the range of seven per cent to 7.25 per cent today on the back of higher demand in the initial part of the new reporting fortnight, while government security prices went up by 15-20 paise at the longer end of the market on the back of stable rupee in the forex market.
Call rates opened in the region of seven per cent to 7.10 per cent in the morning, but inched up a bit after the liquidity adjustment facility auction.
A dealer said, "the liquidity was slightly under pressure as the demand was higher in the start of the reporting fortnight. Moreover, as on the major lenders put money in the repo auction, which pushed up the bits further."
Another dealer mentioned that the market was also concerned over the advance tax outflow that will start from June 15.
The Reserve Bank of India (RBI) today received a single bid of Rs 6,000 crore in its one-day repo auction.
The apex bank received the bid at the cut-off rate of 6.50 per cent. The central bank, however, did not receive any bid for the one-day reverse repo auction.
Government security prices recovered today after continuous fall in the last one week. Dealers said it is the stable rupee that pushed up the sentiment in the market.
Some also termed it a corrective movement, as the prices fell more than what they should be. Prices, however, came down a bit as the RBI put two securities -- 11.50 per cent 2011 and 10.25 per cent 2021 paper -- in the open market window.
Call money rates are likely to be in the range of seven per cent to 7.50 per cent tomorrow on the back of a high demand in the market.
The government security market will remain stable on account of outflow of liquidity through open market window. Dealers said the prices should move within a band of 10-15 paise today.
