Indian cash rates end at 6 pct on low demand

MUMBAI, July 4 - Indian overnight cash rates were higher on Friday, but demand for funds was low since banks had already made arrangements for funding their reserve requirements ahead of the reporting day.

Call rates <INROND=> ended at 6.00/6.25 percent, higher than its previous close of 4.75/5.00 percent.

"Demand is generally lower on the reporting day as banks cover their positions in advance, but call rates may go up tomorrow after the cash reserve ratio hike takes effect," a dealer with a state-run bank said.

Banks have to report their cash balances to the Reserve Bank of India every two weeks and the reporting day for this fortnight falls this Friday.

The central bank increased banks' cash reserve ratio by 50 basis points in a surprise move in mid-June to tame inflationary pressures. The increase will take effect in two stages of 25-basis-points each on July 5 and July 19.

The weighted average rate in the call money market was 6.29 percent, while collateralised borrowing and lending obligation , a secured form of money market lending was 4.60 percent, according to the Clearing Corp of India .

Volume in the call money market was 94.39 billion rupees and in CBLO it was 294.94 billion rupees, CCIL data showed.

The central bank absorbed 117 billion rupees from various banks at its daily reverse repo auction on Friday, while it did not receive any bids at its repo auction, indicating cash supplies in the banking system are currently sufficient.

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