Call rates unlikely to ease: Harihar Krishnamoorthy

By Harihar Krishnamoorthy (Head, Treasury, FirstRand Bank)

The money markets have been grappling with a liquidity shortage of the order of Rs 1.5 lakh crore on a daily basis and finally should see some respite in this new fortnight as the 50 basis points CRR cut releases around Rs 30,000 crore into the system in this new fortnight.

However, the relief may not be very significant, as we have slated GSec auctions of Rs 12,000 crore and treasury bill auctions of Rs 13,000 crore, which would drain out liquidity.

Call rates thus may not ease significantly, and we should see rates sticky at around 9%. Banks would remain issuers in the CD market with one-year rates around 9.75% to 9.85% with CP rates a tad higher. We should also see benchmark 10-year rates at around 8.25%to 8.40%.