Call rate to firm up, bonds to track liquidity conditions

Mumbai, Mar 19 (UNI) The call money rates climbed up this week closing in the range of 6.00-6.25 per cent compared to 6.70-6.80 per cent rate at which it closed during the previous week.

Easing of the liquidity conditions evident from increasing reverse repo auctions helped the call rates to soften below the repo rate of 6.50 per cent.

Call rates are expected to trade higher on account of tightening liquidity conditions of tax related outflows from the banking system, an analyst said.

Bond prices closed higher this week as inflation rate came down to 4.02 per cent as compared to 4.29 per cent in the previous week, also the easing of liquidity conditions helped bond markets.

The US bond prices climbing up also lifted the sentiments.

However trading remained thin as liquidity fears and interest rate concerns cast their shadow on bond market activity.

The yield on the actively traded 8.07 per cent 2017 firmed up to 7.42 per cent before closing at 7.39 per cent, down from its previous week's close of 7.40 per cent.

Next week bonds were expected to track the liquidity conditions in the money market, an expert said.

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