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Informist, Saturday, Sep 21, 2024

By Siddhi Chauhan
 

MUMBAI – The interbank call money rate ended below the Reserve Bank of India's repo rate of 6.50% 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 6.40%, against 6.75% for three-day loans on Friday.

On Thursday, liquidity in the banking system was in a surplus of 248.25 bln rupees, against the deficit of 26.26 bln rupees on Wednesday, according to data from the RBI. The banking system's liquidity is expected to slip back into deficit in the coming days as outflows for goods and services tax would have taken place today, dealers said. Dealers peg the outflow for the same to be somewhere around 500 bln rupees to 1 trln rupees. 

Keeping this in mind, the central bank had conducted a 14-day variable rate repo operation on Friday. The auction was oversubscribed as banks put bids of 405.26 bln rupees. The central bank accepted bids worth 250.02 bln rupees at the cutoff rate of 6.52%. The auction will be reversed on Oct 4.

The anticipation of tight liquidity condition on Monday led market participants to expect a variable rate repo operation of shorter maturity on Monday, dealers said. 

The following are the other highlights:

* The weighted average call rate was 6.29% against 6.69% on Friday.

* The weighted average rate for triparty repo was 6.73% as compared to 6.59% on Friday.

OUTLOOK

* On Monday, the one-day call money rate may open above the RBI's repo rate of 6.50% due to firm demand from banks amid tight liquidity conditions.

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

CALL RATE

6.40%--Today's close for two-day loans

6.05%--Today's open for two-day loans

6.75%--Friday's close for three-day loans

End

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

Edited by Aditya Sakorkar

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