Call rates expected to be between 3.00% and 3.50%

The truncated week, on account of the Republic Day holiday, is not likely to put pressure on call money rates. While the beginning of the week will see outflows of Rs 7,000 crore on account of auction of government securities, the latter part of the week will see inflows of around Rs 14,000 crore as a result of interest payments and maturities of government securities.

Liquidity is thus expected to be easy with call money rates likely to be closely aligned to the reverse-repo rate. In the policy review, while most market participants anticipate a hike in CRR by up to 50 basis points, there is no clear consensus about the repo and reverse-repo rates. An increase in CRR is unlikely to affect the call money rates, but a change in reverse-repo rate could accordingly influence the movement of call money rates, post policy.

(Vikrant Mehta, Fund manager, Fixed income AIG Global Asset Management)