Call money rates opened around 13.5-14.5 per cent. Demand was low on account of today being reporting Friday. "Most of the players have covered their position on Wednesday," said a dealer.
The Reserve Bank of India (RBI) mopped up Rs 370 crore through the one-day repo at a cut-off rate of 14 per cent and Rs 1,925 crore through the four-day repo at a cut-off rate of 15 per cent.
The apex bank, along with the repo auctions, also conducted reverse repo auctions yesterday. One bid worth R 1,000 crore was accepted at a 16 per cent cut-off rate.
"It must be a large public sector bank, which has borrowed a large amount at a high cut-off rate," said a dealer at a private sector bank.
In the government securities market, trading was mainly concentrated in the short and medium end with yields rising throughout the day. A dealer said, "In the morning hours the yields rose due to the higher-than-expected cut-off rate at Wednesday's repo auction and higher cut-off yield for the 364-day treasury bill."
The rise in the yield continued in the later hours following the weakening of rupee. "As the rupee fell once again this morning, prices of government securities slipped sharply by around 25-30 paise."
The 12.50 per cent paper maturing in 2004 witnessed a traded volume of Rs 170 crore, while the total traded volume in the gilts market was around Rs 700 crore.
Call rates are expected to ease down today as most players have covered their reserve requirement before the reporting Friday. Call is expected to be in the 10-12 per cent range. The movement in gilt prices will track the forex market. If the rupee weakens further, the yield in government securities will increase, said a dealer.
