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"Is excess liquidity in system keep call rates down?"

Created by : Esha Johar, Risk Analyst, Irevna  | 05 14 2009 10:11:19 +0000
Industry : Equity Research/AnalyticsFunctional Area : India(Markets)
Keywords : liquidity call rates
Activity:  87 views;  last activity : 07 06 2010 20:18:09 +0000

Call rates are likely to remain close to the lower end of the interest rate corridor.Is due to excess liquidty in the system?

  
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I think due to excess of liquidity call rates dipped to more than 3-week lows during the last week, It is so because  most banks seemed to have had ample funds to meet their reserve needs.Moreover corporate bonds gained as investors bought debt encouraged by the absence of any significant fresh supplies of company bonds, while shortage of trading days in the week also prompted traders to buy aggressively.
Corporate bond yields are expected to ease looking at the positive mood led by ample liquidity, though trading could remain lackluster.
By Esha Johar, Risk Analyst, Irevna  05 14 2009 10:12:33 +0000
 
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I do agree. It also mean that the interbank market is subtle now. Banks are parking excess liquidity in reverse repo. This is good news for stocks where the borrowing costs for investment in stocks is lower.
By Mathew Cherian, Research Associate/Analyst, Western Michigan University  | 05 19 2009 05:21:13 +0000
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Agree with you esha
By Dushyant Hada, Territory Manager  | 05 15 2009 14:30:29 +0000
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