More Stories

Informist, Monday, Jul 22, 2024

By Richard Fargose

MUMBAI - The inter-bank call money market rate ended above the Reserve Bank of India's repo rate of 6.50% because of firm demand for funds amid outflows for goods and services tax payments, dealers said. The one-day call money rate ended at 6.55% against 5.75% on Saturday for two-day loans. 

The liquidity surplus in the banking system narrowed to 734.45 bln rupees on Sunday due to goods and services tax payment outflows over the weekend, dealers said. On Thursday, the liquidity surplus was 1.39 trln rupees. Earlier this month, inflows on account of government spending had resulted in widening of the liquidity surplus in the banking system, dealers said. 

Owing to the narrowing of the surplus, the weighted average call rate inched higher today as the overall demand for funds was strong, dealers said. The weighted average call rate was 6.60% today, as against 6.11% on Saturday and 6.53% on Friday.

Demand for funds was also firm for most of the day due to outflows of 310 bln rupees for gilts auctioned on Friday, dealers said.

Market participants expect banks to reduce cash balances with the central bank today. They maintained 10.05 trln rupees on Sunday, which is higher than the average daily cash reserve requirement of 9.89 trln rupees for the current fortnight, according to the data. So far, in the current fortnight ending on Jul 26, banks have maintained average cash reserve of 9.95 trln rupees.

The following are the other highlights:

* The weighted average call rate was 6.60% against 6.11% on Saturday.

* The weighted average rate for triparty repo was 6.59% as compared to 6.40% on Saturday.

* Reversal of the standing deposit facility added 456.63 bln rupees to the banking system, while reversal of the marginal standing facility drained 13.02 bln rupees.

OUTLOOK

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

* However, the rates may ease intraday owing to prevailing surplus liquidity in the banking system.

* During the day, the call rate is seen in a range of 6.20-6.75%, dealers said.

CALL RATE

6.55%--Today's close for one-day loans

6.65%--Today's open for one-day loans

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

BENCHMARK MIBOR (in per cent)

Mumbai Interbank Offer Rates compiled by Financial Benchmarks India:

India Call:Above repo rate; liquidity surplus narrows on GST outflows
 

MUMBAI – The interbank call money rate was above the Reserve Bank of India's repo rate of 6.50% due to demand from banks to meet funding requirements amid Goods and Services Tax payments outflows, dealers said. The one-day call money rate was 6.65% as of 0930 IST, against 5.75% at close on Saturday for two-day loans. 

The liquidity surplus in the banking system narrowed to 998.79 bln rupees on Friday from 1.39 trln rupees on Thursday, data from the RBI showed. Earlier this month, inflows on account of government spending had resulted in widening of the liquidity surplus in the banking system, dealers said. 

"Today, around 70,000-80,000 crores (700-800 bln rupees) GST outflows will be there," said a dealer with a large state-owned bank. "Auction payment is also there, so the RBI may or may not hold reverse repo today." 

Today, outflows of 310 bln rupees will take place towards gilts auctioned on Friday. 

Banks maintained higher cash balances with the central bank on Friday. They maintained 10.14 trln rupees on Friday, which is higher than the average daily cash reserve requirement of 9.89 trln rupees for the current fortnight, according to the data. 

Most dealers expect the RBI to continue managing liquidity in the banking system by conducting fine-tuning repo-reverse 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, which got reversed today.

Following are the other highlights:

* The weighted average call rate was 6.69%, against 6.11% on Saturday.

* The weighted average rate for triparty repo was 6.54%, against 6.30% on Saturday.

* Reversal of the standing deposit facility added 35.82 bln rupees to the banking system, while reversal of the marginal standing facility drained 7.80 bln rupees. 

* The call rate is seen in a range of 6.20-6.70% during the day. (Richard Fargose)

End

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

Edited by Vandana Hingorani

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.