Call rates trade high at 6.40-7.60 pc level, gilts down

Mumbai, Sep 29 (UNI) Call rates today traded very high between 6.40-7.60 per cent level, as the fall in US treasury prices increased the pressure on the market.

The Reserve Bank of India (RBI) in the call money market yesterday transacted Rs 16,849.84 crore at the weighted average of 6.46 per cent.

In the first liquidity adjustment, the apex bank transacted Rs 1,175 crore through three bids at the rate of 6.00 per cent, whereas Rs 12,195 crore was transacted in the second Liquidity adjustment through 24 bids.

The central bank did not inject any money through the repo auction.

Gilt prices declined further following the unfavorable remarks of the RBI Governor and on tight inter-bank rates. After the trading hours yesterday, RBI Governor Y V Reddy commented that long-term real interest rates have not changed in the desired direction and posed a challenge to the ''effectiveness of monetary policy''.

Higher call rates also propelled banks to cut positions to meet their mandatory reserve requirements on the last day of the reporting period.

Moreover, a sharp surge in global oil prices, with Brent trading above US 62 dollars a barrel and a fall in US Treasury prices sustained pressure on the market.

The 11-year bond (GS 8.07 per cent 2017) traded low at 102.64 and gave a yield of 7.69 per cent.

Today, the apex bank had fixed the reference rate for the day at Rs 45.96 per US dollar flat, as compared to the previous rate of Rs 45.92 per USD.

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