Indian call rates steady on comfortable liquidity
Indian overnight cash rates were largely steady for the seventh straight day today as demand for funds was lower towards the end of the reporting cycle.business Updated: Jan 15, 2009 13:15 IST
Indian overnight cash rates were largely steady for the seventh straight day on Thursday as demand for funds was lower towards the end of the reporting cycle.
At 12:56 pm, call rates were at 4.25/4.30 per cent, little changed from Wednesday's close of 4.20/4.25 per cent.
Dealers said some banks are still borrowing as they have not yet met their reserve needs, but that is offset by comfortable cash conditions in the system, keep call rates steady.
Banks have to report their cash balances to the Reserve Bank of India every two weeks.
A dealer with a foreign bank said outflows against last week's bond sales, which took place on Monday, did not hurt the liquidity, helping call rates to remain steady a little above 4 per cent through the week.
The central bank's latest cut of 50 basis points in bank's cash reserve ratio, takes effect on Saturday, and will release 200 billion rupees into the banking system.
Dealers said this additional liquidity will help keep call rates lower next week.
The central bank's buyback of 30 billion rupees worth intervention bonds later in the day will also add up to the inflows.
The government sold 90 billion rupees worth t-bills on Wednesday, and is scheduled to sell another 100 billion rupees of bonds on Friday.
Banks parked 56.25 billion rupees with the central bank at its morning reverse repo auction, but did not borrow any funds through the repo, an indication of surplus cash in the system.