Call rates to track reverse repo

Call rates traded near the reverse repo rate throughout last week on soft inter-bank liquidity.New fortnightly reserve requirements, excess covering ahead of the twin gilt auctions and quarterly advance tax outflows led to heavy borrowing demand.

However, abundant fund supplies, as indicated by RBI’s liquidity adjustment facility subscriptions, smoothly met the existing demand for funds and helped call rates trade in a soft range. Daily average subscriptions at the one-day reverse repo auction stood at Rs 42,145 crore.

The cumulative collateralised borrowing and lending obligation volumes for the week fell to Rs 76,934 crore from Rs 84,363 crore. Fund outflows on account of taxes and the gilt auction are unlikely to exert pressure on money market rates. Call rates are likely to trade soft near the reverse repo rate.