Dealers said that the "progressive reduction in the repos rate is a clear indication that the central bank is comfortable with the rupee's recent stability." The RBI accepted five bids for Rs 1,370 crore at its one-day repos and another five bids at its three-day repos. In all, the central bank mopped up Rs 7,730 crore by way of repos. Call rates held below 9 per cent levels after opening at 8-9.05 per cent from its last at close at 9-9.25 per cent.

Traders pointed to the ample liquidity as another reason that prompted the central bank to cut repo rates. During the September, the average amount outstanding under repos has been nearly Rs 11,200 crore according todealers.

During the current month, the same has stood over Rs 11,000 crore. Many saw the move as the central bank's attempt to align the repo rates with its bank rate at eight per cent.

Dealers also pointed at the response to the auction of the 11.30 per cent 2010 on Friday. The central bank received 204 bids for Rs 7,087.22 crore against the notified amount of Rs 2,000 crore. The Reserve Bank accepted 78 bids for Rs 3,000 crore the report added.

The cut-off price was Rs 97.71.Inter-bann sources said that they expected inflows of atleast $2 billion on account of the India Millennium Deposit (IMD) to be floated by the State Bank of India must also have acted as a comfort to the central bank.

The central bank first introduced the additional repo auctions and hiked rates in August with the fall in the rupe, which came under pressure because of a spiralling oil import bill and poor capital inflows.

The rupee has recovered from a record low of 46.41 on September 20 after the country announced plans for a deposit issue to be floated by the State Bank.