Call rates may track policy cues, Re likely to edge up

In the last week of the reporting period, call rates eased at the end to 6.8-6.9% from 7-7.1% previously. Signs of improving liquidity, evident from the increase in the RBI LAF reverse repo subscription, helped rates to soften in spite of higher demand.

The average daily subscriptions at the reverse repo auction rose to Rs 9,887 crore against Rs 1,921 crore in the previous week. The average daily subscriptions at the repo auction was Rs 602 crore against Rs 1,293 crore last week. Money market activity turned dull on Friday due to a one-day strike by banks.

Call rates are expected to stay firm initially as players may rush to cover their fortnightly requirements in advance ahead of the twin auctions. Rates are likely to be influenced by the policy decisions.

CREDENCE ANALYTICS INDIA PVT LTD