MUMBAI, January 23: With banks rushing to cover their short-term requirements, interest rates at the inter-bank call money market (where banks lend and borrow for their reserve requirements) zoomed to 100 per cent on Friday.The overnight call market opened at a high of 65-75 per cent and shot up to 100 per cent in the morning session itself before closing at 75 per cent. Most deals were struck in the region of 60 to 90 per cent. Bankers feel a second round of PLR hike is in the offing if high call rates continue for some more weeks.
"Huge demand was seen in the market, but owing to shortage of supply, only a few transactions took place," said a dealer from the Securities Trading Corporation of India (STCI). State Bank of India (SBI), a traditional lender in the call market, was absent. Mostly term-lending institutions and insurance companies were lending in the market.
Dealers expect the tightness to continue as banks have not been able to generate enough rupee resources - by liquidating their
short-term investments - to meet the CRR requirements. Call rates had touched 140 per cent last week after the RBI hiked bank rates and cash reserve ratio.
Meanwhile, government securities (gilt) continued to tumble on Wednesday with call rates touching the 100 per cent mark during the day. "There were a lot of desperate sellers in the market during their day," said a dealer with a private-sector bank. "With prices falling, the yields on T-bills went up further to 24 per cent levels today," said a dealer with a public-sector bank.
"A lot of public-sector banks were seen moving in to offload government securities," said another dealer. The wholesale debt market segment of the National Stock Exchange witnessed trades worth Rs 494.95 crore on Friday. The 13.50-per cent 1998 government loan was traded for Rs 37 crore at a weighted yield of 22.32 against 18.81 per cent on Wednesday.
The 364-day treasury bill maturing on February 27 was traded for Rs 22 crore at a weighted yield of 24 per cent. Repo deals
worth Rs 205 crore were traded today.
Rupee firm
MUMBAI: The rupee continued to strengthen against the US greenback, but ended off its day's high in cautious trade at the interbank foreign exchange (forex) market. Opening mildly lower at Rs 38.73/78 per dollar from Thursday's finish of Rs 38.72/76, the rupee firmed up to Rs 38.70/73 at the close, after touching an intra-day peak of Rs 38.59/63 on renewed dollar sales.
The Indian currency gained marginally by around three paise vis-a-vis the greenback today, following a 27 paise appreciation in the earlier two consecutive sessions.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
