Call rates may follow reverse repo

Call rates traded around the reverse repo rate throughout the week and closed flat at 6-6.10%. Increased government spending towards salary payments resulted in abundant systemic liquidity.

The residual demand by banks to meet the mandatory reserve requirements remained low. The average daily subscriptions at the reverse repo auction rose to Rs 48,142 crore, while no bids were received at the repo auction.

The cumulative CBLO volumes for the week rose to Rs 90,325 crore from Rs 89,855.4 crore. The overnight weighted average yield was higher at 5.8505% as against 5.7631% in the previous week.

New fortnightly requirements and auction outflows may keep the borrowing requirements high. However, call rates are expected to track reverse repo rate on healthy cash reserves in the system.