Call rates fall following CRR cut
By Neelima Shankar
Oct 16, 2008
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The CRR cut has injected Rs 60,000 crore of funds in the system and eased the liquidity along with a fall in call rates. The inter-bank call rates came down below 10% on Monday from the high of 22% on Friday.

Call rate is an inter-bank interest rate on funds that are not deposited for a fixed period. It relates to money deposited in a bank for an indefinite time.

At the beginning of the lat week, overnight call rates decreased within the range of 9-16% with Weighted Average Rate (WAR) at 14.21%. Thereafter call rates declined sharply within the range of 5-9% with WAR at 8.21%.

However, during the mid-week call rates declined ranging between 8.5- 11% with WAR at 10.64% and at the end of the week, call rates slumped within the range of 9-11% with WAR at 10.48%.

On October 14th, the one-day call rate ended in the range of 9.75-10% with WAR at 8.97%.

At the same time government bond prices showed mixed trading due to alternate bouts of buying and selling.

The CRR cut has also helped the domestic currency Rupee to recoup some of its losses. Rupee has crossed a mark of 49 against the dollar.

Mr Dilip Raghuwanshi, Forex Advisor, Asit C Mehta Pvt Ltd, said, "The market is taking the measures in a positive tone. We should see improvement in the equity market, which will in turn help the rupee. People will gain confidence and come back to the equities, which will also help the rupee."

Finance minister P Chidambaram further imparted a feeling of comfort to the financial community by saying that the government would shortly announce more measures, including issuing advisories to banks to "infuse liquidity into the system, make credit intermediation smoother and increase the confidence of depositors and investors."


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