Call may track reverse repo

Last week, inter bank rates traded around the reverse repo rate at 6-6.10%. Excess covering ahead of the twin auctions and residual demand resulted in a drop in the RBI Liquidity Adjustment Facility (LAF) subscription. The amount placed under the LAF reverse repo window averaged to Rs 30,546 crore as against Rs. 40,591crore in the previous week.

New fortnightly requirements and auction outflows could result in higher demand at the start. However, given healthy cash supplies in the system, call rates are expected to track reverse repo rate.