Call money ends low at 6.10-6.20 pc as RBI hand seen in forex mkt

Mumbai, Feb 27 (UNI) Interbank call money today ended 5 basis points lower at 6.10-6.20 per cent, compared with 6.05-6.15 per cent in view of the Union General budget to be tabled tomorrow.

Consistent intervention by the RBI in the forex market has brought in ample amount of cash in the market, traders said.

Intra-day, the rates moved between a low of 6.00 per cent and a high of 6.20 per cent. Call rates are expected to ease or open steady tomorrow.

The government's annual economic survey has sparked worries that the central bank may raise rates again in the near term to check inflation.

The finance minister will outline borrowing plans for the next fiscal year starting April 1, tomorrow when the Union Budget will be tabled. The survey expected the government to post a fiscal deficit of 3.6 per cent of GDP for 2006/07, lower than a budgeted target of 3.8 per cent.

Banks have not borrowed via the central bank's repurchase window since last Wednesday. On Monday, the central bank absorbed nearly Rs 23,500 crore through its reverse repurchase auction.

In its economic survey, the finance ministry said the country must not lose its nerve over the economy's rapid growth, saying the momentum is sustainable even though containing inflation would be a challenge.

The survey, considered a report card on the state of the economy, spurred analysts to believe the central bank may take more aggressive steps to cool price pressures.

Inflation is running at a two-year high and the economy is expanding at its fastest pace in 18 years.

Earlier this month, the hike in CRR, by the RBI, had not done much to ease the surplus liquidity in the market thanks to consistent RBI intervention in the forex market to rein in a bullish rupee.

Meanwhile, the Indian bond yields gave up early gains to end flat on Tuesday after the government's annual economic survey sparked worries the central bank may raise rates again in the near term to check inflation.

The yield on the benchmark 10-year bond ended at 7.89 per cent, off an intraday low of 7.86 per cent, but unchanged from the previous close of 7.89 per cent.

Total traded volumes were Rs 3125 crore and the 7.37 per cent bond, maturing in the year 2014 was the most actively traded.

Better cash surpluses with banks have aided buying in bonds. Banks have not borrowed via the central bank's repurchase window since last Wednesday.

The economy is estimated to grow 9.2 per cent in the fiscal year to March 31, raising concerns it is overheating as infrastructure fails to keep pace with rising domestic demand.

Spreads between the 1-year and the 10-year federal bonds tightened to 30 basis points from 34 basis points at the last close, dealers added.

UNI