Call likely to remain steady

Inter-bank rates ended at 6.40-6.60%, substantially higher from their last close of 6.05-6.15%. Deals during last week were reported at levels as high as 6.80-6.90%. Amidst shrinking money market liquidity, high borrowing requirements to provide for the new fortnightly targets sustained pressure on the market. Moreover, banks preferred lending in the open market at rates higher than the reverse repo.

All this was well reflected at the daily subscriptions at the reverse repo auction that averaged to Rs 8,869 crore from Rs 33,043 crore in the previous week. However, reverse repo bids showed an improving trend towards the end of the week. Call rates are expected to edge lower and trade steady.