More Stories

Informist, Wednesday, Jul 24, 2024

By Richard Fargose

MUMBAI - The interbank call money market rate ended above the Reserve Bank of India's repo rate of 6.50% as demand for funds remained firm amid a decline in liquidity surplus in the banking system, dealers said. The one-day call money rate ended at 6.67% against 6.50% on Tuesday. 

The liquidity surplus in the banking system was 423.74 bln rupees on Tuesday against 387.57 bln rupees on Monday, data from the RBI showed. Last week, the liquidity surplus had widened to a three-month high of 1.39 trln rupees because of inflows on account of government spending, dealers said.

Owing to the strong demand for funds from banks, the weighted average call rate remained elevated at 6.67% today, unchanged from Tuesday.

Due to elevated interbank borrowing rates, banks today parked only 38.60 bln rupees at the RBI's two-day variable rate reverse repo auction for a notified amount of 500 bln rupees.

Market participants expect banks to reduce their cash balances with the central bank, as they have maintained the excess balance in the current fortnight so far. They maintained 9.93 trln rupees on Monday, 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 an average cash reserve of 9.93 trln rupees.

The liquidity surplus is expected to widen on Friday due to scheduled redemption of 8.40%, 2024 gilt of worth 609.45 bln rupees on Friday. 

The following are the other highlights:

* The weighted average call rate was 6.67%, unchanged from Tuesday.

* The weighted average rate for triparty repo was 6.62% as compared to 6.67% on Tuesday.

* Reversal of the standing deposit facility added 516.30 bln rupees to the banking system, while reversal of the marginal standing facility drained 46.35 bln rupees. 

OUTLOOK

* On Thursday, 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.

* During the day, the call rate is seen in a range of 6.20-6.80%, dealers said.

CALL RATE

6.67%--Today's close for one-day loans

6.75%--Today's open for one-day loans

6.50%--Tuesday's close for one-day loans

BENCHMARK MIBOR (in per cent)

Mumbai Interbank Offer Rates compiled by Financial Benchmarks India:

India Call: Near MSF rate as liquidity surplus down post GST outflows
 

MUMBAI – The interbank call money rate was around the Reserve Bank of India's Marginal Standing Facility rate of 6.75% due to strong demand for funds from banks as the liquidity surplus narrowed this week post Goods and Services Tax outflows, dealers said. The one-day call money rate was 6.70% as of 0930 IST, against 6.50% at close on Tuesday.

The liquidity surplus in the banking system was 423.74 bln rupees on Tuesday against 387.57 bln rupees on Monday, data from the RBI showed. Last week, the liquidity surplus had widened to a three-month high of 1.39 trln rupees because of inflows on account of government spending, dealers said. 

However, the RBI today will conduct a two-day variable rate reverse repo auction for a notified amount of 500 bln rupees despite the narrowing of the liquidity surplus and the elevated interbank borrowing rate.

"Both call and TREPs (Triparty Repo) rates are around 6.70%, so there won't be much participation in the VRRR (variable rate reverse repo) auction today," said a dealer with a private bank.

Banks maintained a higher cash balance with the central bank on Tuesday. They maintained 9.93 trln rupees on Monday, 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 an average cash reserve of 9.93 trln rupees.

Following are the other highlights:

* The weighted average call rate was 6.79%, against 6.67% on Tuesday.

* The weighted average rate for triparty repo was 6.68%, against 6.67% on Tuesday.

* Reversal of the standing deposit facility added 516.30 bln rupees to the banking system, while reversal of the marginal standing facility drained 46.35 bln rupees. 

* The call rate is seen in a range of 6.20-6.80% during the day. (By Richard Fargose)

End

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

Edited by Deepshikha Bhardwaj

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.