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Call rate inches up on soaring demand

23 Nov 2011 Evaluate

Interbank call money rates moved higher at 8.70/75% than its previous close of 8.60/8.70% on Tuesday, as demand accelerated after banks scurried to cover their mandated requirement for the current reporting cycle in order to avoid the volatility of cash rates approaching the second week of reporting fortnight. Liquidity which has remained tight after the outflows towards the government bond sale held last Friday, has been adding to the huge borrowings from central bank's repo counter from past three consecutive sessions. However, this in a way has provided a lid to the surge of call rates.

However, the pressure on cash rates may ease approaching the second week of reserves funding cycle, firstly, because of waning demand and secondly as central bank, in a bid to ease tight banking system liquidity, will buyback bands up to Rs 10,000 crore on Thursday.

The banks via Liquidity Adjustment Facility (LAF) borrowed Rs 135,440 crore through repo window on November 23, 2011 and Rs 131,540 crore through repo window on November 22, 2011.

The overnight borrowing rates has touched a high of 8.75% and a low of 8.00%, so far.

According to the Clearing Corporation of India (CCIL), the weighted average rate (WAR) in the call money market was 8.63% on Tuesday and total volume stood at Rs 15355.05 crore.

As per CCIL data, WAR in the CBLO (Collateralized Borrowing and Lending Obligation) market was 8.60% on Tuesday and total volume stood at Rs 32940.20 crore.

The indicative call rates which closed at 8.60/70% on  Tuesday were contributions made from Andhra Bank, AXIS Bank, Bank of America, Bank of Baroda, Bank of India, Canara Bank, J P Morgan Chase, Citibank N.A., Corporation Bank, Credit Agricole Bank, Indusind Bank, ICICI Bank, ICICI Securities, IDBI Bank, Jammu and Kashmir Bank, Punjab National Bank, RBS, Societe Generale, Standard Chartered Bank, State Bank of India, Union Bank of India, ING Vysya Bank, BNP Paribas, HDFC Bank, P&S Bank.

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