MONEY MARKET REPORT
Interest rates in the inter-bank overnight money market ruled in the band of 9-10 per cent yesterday with some lenders also quoting 10.25 per cent. Most of the deals were reportedly done at around 9.50 per cent. The RBI, which received three bids aggregating Rs 2,000 crore at yesterdays repos auction, rejected the same.
Interest rates in the call money market are expected to decline on account of the RBI intervention in the forex markets. With the apex bank mopping up dollars, liquidity in the domestic rupee market may to go up. It is on the basis of this expectation that the prices of the government securities went up marginally by 10-20 paise. There was not much activity in the long-dated paper.
The recently auctioned 13.05 per cent 2007 was being traded at par. Some buyers were also quoting rates marginally below Rs 100.
Given that the calls have been ruling in the band of 9-10 per cent there was not much activity in the T-bills segment. While the 91-day T-bills were being traded at over 7 per cent, those on the 364-day bills have moved up to 9.30-9.50 per cent.
With calls ruling at existing levels, the arbitrage opportunity available have been minimised.
Activity in the treasury bills segment is at the maximum when calls are ruling in the region of 1-2 per cent and banks arbitrage between the treasury bills and call market.
