The inter-bank call rates zoomed to 50% after opening at the previous day?s level of 6.2%. On the reporting Friday, bankers thought the need for funds would be scarce and gave away most money cheap at 6% in early trades. Dealers said banks ended up placing surplus funds under the 6% reverse repo deals with the Reserve Bank of India. The transactions were concluded for four-day money as Monday is a bank holiday. According to one banker, roughly Rs 30,000 crore were parked with the RBI under four-day reverse repos.
?Once this was done, demand started trickling in and suddenly there was frantic calls for funds pouring in from various quarters,?? said a dealer at a private bank.
According to one government bank dealer, the demand from banks to honour huge deposit withdrawals of their mutual fund clients. Mutual funds were buying equities after the Sensex plunged beyond 500 points in midday trades.
There were also huge borrowing deals by non-banks under the collateralised borrowing and lending obligations (CBLO) at 50%.
Both the rates, interbank call and CBLO, ended at 13%-14 %. Most deals during the day averaged between 15% and 20%, a dealer at a private bank said.
There is still a fear factor dominating the market and the interbank call rates would larely depend upon the currency trend.
The rupee remained volatile and sea-sawed like the BSE Sensex. It opened at 41.60 to the dollar and dipped a low of 41.72 before ending firmer at 41.32
Dealers said the wild swings were largely on concerns that capital outflow of foreign funds would rise with the Sensex fall and the dollar could continue to get stronger against the domestic currency.
The subprime mortgaged home-defaults in the US have been having a negative impact on the domestic bourses since Thursday. The rupee opened weaker from its previous close of 41.36 a dollar to 41.60. The rupee hit a low of 41.72 as exporters dumped dollars and importers abstained hoping the greenback would weaken. The rupee finally ended stronger after exporters unwound long open dollar positions. The currency ended at 41.31/32. The government bond market surprisingly reversed Thursday?s trend of rising yields. Dealers said the sentiment was that of a stable interest rte scenario, because the currency is viewed in range of 41.20-41.70 a dollar.
