Call rates trade higher on Tuesday as demand for funds was robust

24 Jan 2012 Evaluate

Interbank call money rates were trading at 8.95/9.00 percent, higher from Monday’s close of 8.60/8.65 percent, as demand for funds was robust in a holiday-shortened week. The cash shortfall in the banking system is due to an increase in currency in circulation with the public and also on the Reserve Bank of India’s (RBI) intervention in the foreign exchange market. The RBI has been said to be intervening in the foreign exchange market to curb excess volatility and has taken steps to stem the sharp slide in the currency in the last couple of weeks. Further, there is seasonal demand for cash at the start of the harvesting season and elections increasing the currency in circulation.

The banks via Liquidity Adjustment Facility (LAF) borrowed Rs 1,23,250 crore through repo window on January 24, 2012. While, banks using LAF borrowed Rs 1,41,770 crore through repo window on January 23, 2012.

The overnight borrowing rates has touched a high of 8.75% and a low of 8.50%, so far.

According to the Clearing Corporation of India (CCIL), the weighted average rate (WAR) in the call money market was 8.71% on Monday and total volume stood at Rs 10487.07, on the same day.

As per CCIL data, WAR in the CBLO (Collateralized Borrowing and Lending Obligation) market was 8.41% on Monday and total volume stood at Rs 36044.85 crore, on the same day.

The indicative call rates which closed at 8.60/8.65% on Monday were contributions made from Andhra Bank, AXIS Bank, Bank of America, Bank of Baroda, Bank of India, Canara Bank, J P Morgan Chase, Citibank N.A., Corporation Bank, Credit Agricole Bank, Indusind Bank, ICICI Bank, ICICI Securities, IDBI Bank, Jammu and Kashmir Bank, Punjab National Bank, RBS, Societe Generale, Standard Chartered Bank, State Bank of India, Union Bank of India, ING Vysya Bank, BNP Paribas, HDFC Bank, P&S Bank.