Call rates are seen in the 6.50-6.75 per cent range this week as it has been for the past one month with enough liquidity in the system.
According to money market dealers, though there is a chance for another open market sale of government securities during the week, it is unlikely to push up call rates significantly.
A primary dealer said, "The system is flushed with liquidity. Though it will be the first week of the new reporting fortnight, demand will be low for overnight money."
The treasury head at a private sector bank said, "Since the cash reserve ratio cut is effected on November 3, the liquidity situation has become comfortable. That's why before the closing of last fortnight call rates even dipped below the refinance rate. This week, as the demand will be bit higher as compared to last week, rates are unlikely to go beyond the 6.75-per cent mark."
There is likely to be another spate of open market sale of government papers during the week.
A dealer with a foreign bank said: "The RBI, by conducting an open market auction last week, has indicated that it is not comfortable with the liquidity situation. As the auction was heavily oversubscribed, there is likely to be another auction worth around Rs 6,000 crore."
Dealers, however, are expecting the auction to be oversubscribed on the back of easy liquidity situation. Call rates hovered around 6.50 per cent on Saturday and trading volume was low.
According to dealers, it was a holiday mood in the overnight market and though it was the beginning of a new reporting fortnight there were not many lenders and borrowers.
A primary dealer said, "The liquidity will continue to remain comfortable with good deposit growth and little credit offtake. The problem with the banks is now deployment of funds. On the back of this, overnight rates should be soft and remain at the sub-seven per cent level throughout the week."
The rupee, which is expected to be stronger against the greenback this week, will provide further comfort to the overnight market.
