Call money eases at 5-5.25 pc

Mumbai, Apr 11 (UNI) The call money today resumed lower at 5.00-5.25 per cent, compared with 7-7.25 per cent on the last day, but the auction and an increase in banks' reserve requirements that takes effect on Saturday are expected to put upward pressure on rates.

A leading broker said Indian federal bonds slipped on Wednesday after two days of strong gains as investors booked profits and pared positions ahead of Rs 10,000 crore (USD 2.3 billion) bond auction later in the week.

Cash conditions remained easy during this morning session, the yield on the 10-year federal bond was at 8.03 pc, up from Tuesday's close of 8.02 per cent.

Government spending has boosted surplus cash in the system.

Reflecting this, the central bank received Rs 29,100 crore of bids in its reverse repo auctions on Tuesday, three times higher than yesterday, but cash conditions should tighten later this week.

The government will auction Rs 6,000 crore of 2015 bonds and Rs 4,000 crore of 2036 bonds on Thursday. Further, the first leg of the increase in the cash reserve ratio will drain an estimated Rs 7,750 crore from the system.

Investors expected an auction of market stabilisation bonds to be announced on Friday, as large inflows are expected from bond redemptions and coupon payments next week, brokers added.

UNI