MONEY MARKET REPORT
The money market yesterday ruled easy with the overnight interest rates in the region of five to six per cent, dealers said.
In keeping with the trend there was not much activity in the treasury bills segment.
The government securities market staged a smart, albeit partial recovery with prices moving up by around 30 to 50 paise. It might be recalled that the price of the 12.59 per cent paper which had fallen from a high of Rs 107 to less than Rs 104 recovered to touch Rs 104.50. The price of the 10.85 per cent 2001 and the 11.19 per cent 2005 in which there were some stray deals struck at a discount on Monday also rose. While buyers were quoting at par, sellers were looking for a minimum premium of 30 to 40 paise.
The market appears to be coming to terms with the turbulence in the forex market, said a primary dealer. He added the sentiments would improve after the auction of five-year paper on Saturday. The market, however, is yet to crystallise its opinion on the cut-off yield at the auction.
Some players pointed out this would be an ideal time for buying securities with prices having recorded a decline.
In some quarters the question of whether the central bank should be buying government paper from the market to stabilise the yields is being raised.
