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Informist, Saturday, Aug 3, 2024

By Aaryan Khanna

NEW DELHI – 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. 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 6.10% for three-day loans on Friday.

On Thursday, the liquidity surplus in the banking system widened to 1.97 trln rupees, the highest since Aug 10 last year, from 1.56 trln rupees on Wednesday, data from the RBI showed. Starting next week, outflows on account of payment for excise duty and tax deducted at source are likely to begin, thereby limiting the liquidity surplus going forward. Regardless, the central bank is likely to continue conducting daily variable rate reverse repos, with maturities on the reporting Friday on Aug 9, dealers said.

At the 14-day, 1.5-trln-rupee variable rate reverse repo on Jul 26, banks parked 234.20 bln rupees with the RBI at a cut-off rate of 6.49%. On Friday, banks also parked 598.60 bln rupees at seven-day, 1.5-trln-rupee reverse repo auction. Both operations will reverse on Friday. 

The following are the other highlights:

* The weighted average call rate was 6.08% against 6.49% on Friday.

* The weighted average rate for triparty repo was 5.82% as compared to 6.21% on Friday.

OUTLOOK

* On Monday, the one-day call money rate may open near the RBI's repo rate of 6.50% because of firm 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 6.20-6.65%, dealers said.

CALL RATE

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

6.05%--Today's open for two-day loans

6.10%--Friday's close for three-day loans

End

Edited by Manisha Baxla

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