Call money ends nearly eight years high at 23-25 pc

Mumbai, Mar 20 (UNI) Interbank call money today closed nearly eight years firm at 23-25 per cent compared to 9.50-10 per cent on the previous day's close as the cash tightening in the banking system spurred investors to pare debt positions to meet daily cash requirements.

Dealers said that it opened a high at 14 per cent, later it registered a historical high of 38-40 per cent during the session, but it came down at 20-22 per cent in intra-day trade.

Every financial ending of the year, particularly on March, Call Money is always widely fluctuated and to create a new peak on the same period, he pointed out.

The call rate jumped up as tax payments by companies and bond auction settlements added to the demand for cash as banks also sought to shore up their deposits before the end of the fiscal year on March 31, 2007.

The quarterly tax payments of Rs 30,000 crore is expected to flow out of the banking system in the past few days.

The Central Bank is continuing with its weekly market stabilisation bond auctions and that is putting an additional strain on liquidity.

The Central Bank will sell Rs 2000 crore of its market stabilisation scheme (MSS) bonds on March 22. It has sold Rs 8,000 crore of MSS bonds so far this month, having resumed selling them after a gap of more than 18 months, bankers added.

UNI