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Informist, Saturday, Jul 20, 2024

By Anupreksha Jain

MUMBAI – The interbank call money rate ended below the Reserve Bank of India's standing deposit facility rate of 6.25% today due to low demand for funds from banks, dealers said. As is usually the case on Saturdays, volume in the call money market was low as most banks had met their funding requirements for the weekend on Friday, dealers said. Today, the two-day call rate ended at 5.75%, against 6.25% for three-day loans on Friday.

On Thursday, the liquidity surplus in the banking system widened to 1.39 trln rupees from 1.15 trln rupees on Wednesday, according to the RBI data.

Going forward, outflows on account of goods and service tax payments may prevent the widening of the liquidity surplus in the banking system, dealers said. On account of goods and services tax payments, 800 bln rupees to 1 trn rupees are expected to go out of the banking system. Dealers expect most payments for goods and service tax to be likely on Monday.

The RBI is likely to continue managing liquidity in the banking system by conducting fine-tuning repo operations. On Friday, the RBI conducted a three-day variable rate reverse repo auction for a notified amount of 500 bln rupees, and banks parked 337.05 bln rupees at the tender. Earlier this week, the central bank drained a total of 1.08 trln rupees through four variable rate reverse repo auctions. All these tenders were reversed on Friday.

The following are the other highlights:

* The weighted average call rate was 6.11% against 6.53% on Friday.

* The weighted average rate for triparty repo was 6.30% as compared to 6.47% on Friday.

OUTLOOK

* On Monday, the one-day call money rate may open above the RBI's repo rate of 6.50% because of firm demand for funds from banks in early trade.

* During the day, the call rate is seen in a range of 6.20-6.70%, dealers said.

CALL RATE

5.75%--Today's close for two-day loans

5.85%--Today's open for two-day loans

6.25%--Friday's close for three-day loans

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Ashish Shirke

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