The Indian cash rate ended down on Friday, after hovering around 9 percent in early trades, as banks covered positions in the first half of the day. The three-day call rate ended at 8.40/8.45 percent, compared with Thursday's close of 9.00/9.05 percent for one-day loans. Traders said banks' demand for funds is likely to remain high even next week.
Generally, the demand eases in the second week of the two-week reserves reporting cycle as most banks prefer to cover their requirements in the first week itself. Banks are borrowing more to shore up their balance sheets ahead of the end of the fiscal year on March 31.
Dealers said the cash rate could inch closer to 9.50 percent, the rate at which banks can borrow from the RBI's marginal standing facility, in mid-March when corporates make their advance tax payments. Bank borrowing from the RBI's repo windown dipped marginally to 1.71 trillion rupees (34.5 billion) on Friday, from a record 1.92 trillion rupees in the previous session.
Volume in the call money market was 175.05 billion rupees, compared with 222.61 billion rupees on Thursday, data from the Clearing Corp of India showed. The weighted average rate in the call money market was 9.08 percent, up from 9.00 percent on Thursday. Volume in the CBLO market was 438.66 billion rupees from 380.18 billion rupees in the previous session, with a weighted average rate of 8.27 percent, down from 8.83 percent. In the interbank repo market, volume slipped to 99.97 billion rupees from 131.49 billion.