ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Money Market Activity: Rising Trends

Rising trends in money market activity observed in August 2009 persisted in September with a notable gain in volumes across the three segments.

Bond and Forex Market Developments

There was a substantial increase in trading in government securities in July while yields remained stable.

Reliance on Short-term Securities

The trend of relying on shorter maturities in auctions started in mid-May and continued in June 2009. As a result, trading shifted to the shorter end of the curve during June, the 10-year benchmark accounting for less than 3% of trading activity while short-term papers accounted for 53%.

Active Money Market

As the banks continued to park their surplus money at the Reserve Bank of India's reverse-repo window, the total amount absorbed through the reverse-repo window increased significantly in May.

Softening of Short-term Interest Rates

With surplus liquidity in the system, the call rate fell from 4.22% to 3.45%, the repo rate declined from 3.95% to 2.54%, and the collateralised borrowing and lending obligations rate dropped drastically from 3.59% to 2.15%, all average values during April 2009 compared to the previous month.

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