More Stories

Informist, Thursday, Aug 8, 2024

 

--RBI Das: Will ensure money mkt rates evolve in orderly manner

--RBI Das: Will continue to be nimble, flexible in liquidity ops

--RBI Das: Transmission in credit markets ongoing

--RBI Das: Term premium has remained steady in recent mos

--RBI Das: Weighted avg call rate was close to middle of LAF corridor

 

MUMBAI – The Reserve Bank of India will ensure that money market interest rates evolve in an orderly manner, Governor Shaktikanta Das said today. The central bank will also continue to be nimble and flexible in its liquidity management operations, keeping in view the evolving liquidity conditions.

 

Das said global financial markets have seen turmoil on concerns of growth slowdown in the major economy, a flare up in geopolitical tensions in West Asia, and the unwinding of the carry trade, and these developments have implications for emerging market economies.

 

"In this context, it would be important for market participants to keep in mind the strength of India’s macroeconomic fundamentals, which remain robust," Das said, detailing the outcome of the third Monetary Policy Committee meeting for 2024-25 (Apr-Mar).

 

"India has built strong buffers that impart resilience to the domestic economy from such global spillovers. The Reserve Bank remains committed to ensure orderly evolution of financial markets in its regulatory domain."

 

The governor said the banking system liquidity has transited from deficit in June to surplus conditions in July.

 

The liquidity condition was in deficit for most part of June on account of liquidity leakage from the banking system due to advance tax payments and goods and services tax related outflows, but with the increase in government spending at the month-end, system liquidity again turned into surplus beginning Jun 28.

 

Mirroring the liquidity dynamics, the weighted average call rate, on an average, remained close to the middle of the liquidity adjustment facility corridor, which is RBI repo rate of 6.50%, Das said.

 

"Across the term money market segment, the yields on certificates of deposit and 3-month treasury bills eased, while the yields on commercial papers remained stable," he said. "The 10-year G-Sec yield softened in June-July and in August so far. The term premium has remained steady in recent months. Transmission in the credit market remains ongoing."

 

The term premium is calculated as the difference between the yield on 10-year gilts and 91-day treasury bills. On an average, the term premium was 22 basis points during Jun-Aug (up to Aug 6) as compared to 18 bps during Apr-May, the RBI data showed.

 

The RBI data showed average yields on certificates of deposit and treasury bills moderated from 7.34% and 6.90% in April-May to 7.13% and 6.76% during Jun–Aug, respectively. Meanwhile, yields on commercial papers increased marginally from 7.75% to 7.76% during the same period.  End

 

Reported by Richard Fargose

Edited by Manisha Baxla

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2024. All rights reserved.