The Hindu Business Line : Call rates touch new low of 0.2%

Mumbai June 20 The inter-bank call rates dipped below one per cent on Wednesday hitting a new low of 0.20-0.30 per cent as supply of funds far exceeded demand, dealers said.

The rates have been ruling between 1.25 per cent and 3 per cent in the past few days.

"Strong FII inflows coupled with the Reserve Bank of India's intervention in the forex market to rein in the appreciating rupee has contributed to the additional liquidity in the system," said Mr P. Mukherjee, Senior Vice-President, Treasury, UTI Bank.

RBI on Wednesday received 34 bids for Rs 46,600 crore in the first reverse repo auction while it accepted only Rs 1,989 crore. In the second auction, it received 32 bids for Rs 29,410 crore against which it accepted bids to the tune of Rs 1,011 crore.

Dealers said the central bank has been intervening in the forex market to prevent the appreciation of rupee beyond 40.70. Dealers also attributed the excess cash in the system to the maturing of the existing securities.

Mr K. Harihar, Head-Treasury, Development Credit Bank, said, "The money from the DLF issue might have been coming into the market and there is also the ICICI issue which will augment the money supply."

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