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Mumbai: Indian cash rates edged higher on Friday as banks rushed to secure their funding commitments and ahead of a 100 billion-rupee bond auction later in the day.
At 10:33 a.m., call rates were at 4.40/4.50 percent, up from Thursday's close of 4.20/4.30 percent.
Some banks are likely to be borrowing in the call market to bid at the auction on Friday as the papers on offer are relatively liquid, a trader at a private bank said.
Banks also have to pay on Friday 90 billion rupees for treasury bills that were auctioned on Wednesday.
The central bank will auction 100 billion worth of bonds, including 30 billion rupees of the benchmark 8.24 percent 2018 paper, 40 billion rupees of the 7.56 percent 2014 bond and 30 billion rupees of a new 30-year security.
However, the rise in call money rates is just a blip as a cash reserve ratio cut comes into effect on Saturday, offsetting the outflow towards the bond sales.
The central bank's latest cut of 50 basis points in CRR, or banks' cash reserve ratio, come into effect on Saturday, releasing 200 billion rupees into the banking system.
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