Call rates stay above repo level on higher demand

Interbank call rates were trading at 8.95/9.00%, little changed from its previous close of 8.95/9.05% and higher than repo level, as banks borrowed to fulfill their fortnightly requirements in the second week of reporting cycle. However, the rates may recede in the coming days not only because of ebbing demand, which is usually witnessed drawing closer to the end of reporting fortnight, but also on account of improved liquidity conditions. Reports suggest that dealers will be allowed to trade bonds even when the central bank is making coupon payments for that debt, in a rule that is expected to improve market liquidity on those days. Under the previous rule, bonds whose coupon payments were due were placed in a one-day 'shut period', which barred traders to trade them on the day before the coupon payment so as to avoid any change in ownership of those securities during the process. The banks via Liquidity Adjustment Facility (LAF) borrowed Rs 21307 crore through repo auction on May 13, 2014. It borrowed Rs 21523 crore via repo window and parked Rs 2074 crore via reverse repo window on May 12, 2014. The overnight borrowing rates touched a high and low of 9.00% and 8.75% respectively. According to the Clearing Corporation of India (CCIL), the weighted average rate (WAR) in the call money market was at 8.91% on Tuesday and total volume stood at Rs 28507.18 crore, so far. As per CCIL data, WAR in the CBLO (Collateralized Borrowing and Lending Obligation) market was at 8.94% on Tuesday and total volume stood at Rs 29611.15 crore, so far. The indicative call rates which closed 8.95/9.05% on Monday were contributions made from Andhra Bank, AXIS Bank, Bank of America, Bank of Baroda, Bank of India, Canara Bank, J P Morgan Chase, Citibank N.A., Corporation Bank, Credit Agricole Bank, Indusind Bank, ICICI Bank, ICICI Securities, IDBI Bank, Jammu and Kashmir Bank, Punjab National Bank, RBS, Societe Generale, Standard Chartered, so far.