A sudden surge in liquidity level ahead of the first phase of CRR cut - slated to take place on Saturday - pushed down the call money rates to 0.25 per cent levels on reporting Friday.

The yields of the 14-day and 91-day treasury bills crashed at the weekly auctions. The yield of the 14-day T-bill fell drastically to 6.27 per cent from 8.89 per cent last week while the yield on the 91-day T-bill declined to 8.02 per cent from 9.19 per cent in the previous auction.

The 50 basis points cut in CRR, to take effect on Saturday, will release Rs 3,600 crore into the system. The call rates opened at 4-4.50 per cent from Thursday's close of 5-5.10 per cent. Three-day money up to Monday was traded at around three per cent. The call rates ended at 0.25-0.75 per cent.

"This sea of liquidity has allowed players to avail of cheap funds from the call market to pay back refinance received from the central bank. Both layers of refinance have been reid to a large extent," a bond trader with a primary dealership said.

According to RBI released data, outstanding refinance at bank rate was a meagre Rs 545 crore, while funds availed of at 200 basis points above bank rate was Rs 33 crore on April 6.

Government bonds ended steady after trading in a narrow range as players awaited the central bank's announcement of a gilt auction-the first in the new fiscal year.

"Traders are not taking positions as everybody is uncertain about which direction liquidity will move next week," a state-run bank dealer said.The benchmark 11.83 per cent 2014 bond ended at Rs 108.27, unchanged from the morning's levels of Rs 108.33. The bond ended at Rs 108.13 on Thursday.Marketmen expect the size of the expected auction, which will kick off the government borrowing programme for fiscal 2000-01 to be large and feel it will sail through comfortably. "The auction size may be over Rs 10,000 crore. The market is easily absorb the outflow as the system is flush with liquidity," the treasury head with a private bank said.

"Given the low interest rate scenario, the Centre is likely to complete 50-75 per cent of the targeted borrowings by July," he added. The government has a budgeted gross borrowing close to Rs 1,17,000 crore during this financial year. Supplies have risen this month, with about Rs 2,000 crore coming from coupon payments, treasury bill redemptions and interest inflows on cash reserve ratio balances of banks.