Call rates gather further momentum as rupee continues to scale fresh lows

Interbank call rates were trading higher at 8.30/40% from its previous close of 8.25/30% on Tuesday, despite the upcoming RBI’s Open Market Operations (OMOs), a measure to ease tight liquidity condition, mainly on account of increased requirement for funds from banks at the start of a new two-week reporting cycle. Much against the RBI’s comfort, banks repo borrowings remained above Rs 1 trillion, for second consecutive session on Tuesday.

Consistent with the stance of monetary policy and based on the current assessment of prevailing and evolving liquidity conditions, the Reserve Bank has decided to conduct Open Market Operations by purchasing the government securities for an aggregate amount of Rs 12,000 crore on May 25, 2012.

Call rates continued to hover around higher levels, as trader’s largely estimate exacerbating liquidity pressure, with RBI interventions in forex markets as rupee continues to scales fresh low, session after session. The rupee fell to its latest record low against the dollar on Tuesday, testing the key psychological level of 56 for the first time.

The banks via Liquidity Adjustment Facility (LAF) borrowed Rs 1,04,510 crore through repo window on May 23, 2012 while, the banks via LAF borrowed Rs 95,290 crore through repo window on May 22, 2012.

The overnight borrowing rates has touched a high of 8.15% and a low of 7.75%, so far.

According to the Clearing Corporation of India (CCIL), the weighted average rate (WAR) in the call money market was 8.08% on Wednesday and total volume stood at Rs 13,523.33 crore, so far.

As per CCIL data, WAR in the CBLO (Collateralized Borrowing and Lending Obligation) market was 8.03% on Wednesday and total volume stood at Rs 20,799.25 crore, so far.

The indicative call rates which closed at 8.25/30% 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.