Call money ends 18 months low at 5.00-5.25 pc

Mumbai, Mar 5 (UNI) The Interbank call money market today closed 18-months low at 5.00-5.25 per cent compared to 6.00-6.10 per cent on the previous day on heavy selling pressure by local opeators in view of surplus funds, brokers said.

Call money fell to 18-month low at 5.00-5.25 per cent on Monday and bond yields rose after the central bank limited the amount of cash it would soak up in daily market operations and said it would issue market stabilisation (MSS) bonds.

From Monday, the Central bank will absorb a maximum of Rs 3,000 crore (USD 675 million) per day at its reverse repurchase auction window, the lowest-yielding money market instrument.

The latest modification is intended to ensure that surplus liquidity is drained out via MSS bills and bonds.

Later, the yield on the 10-year bond bond had risen to 8.00 per cent, higher than 7.94 per cent at the previous close. Total traded volume was a thin Rs 220 crore.

The yield on the one-year treasury bill fell by 28 basis points to 7.25 per cent in early trades.

The entire curve has steepened by nearly 20 basis points. The farther end of the curve has bogged down due to the excess supply and with the central bank limiting the amount of bids it will accept, it has removed the floor.

The Central bank will auction Rs 6,000 crore MSS bonds on 6 March, with settlement due on 7 March.

The government is also scheduled to sell Rs 7,000 crore of bonds later this week, Rs 1,000 crore less than initially planned, brokers added.

UNI