India Call
Ends below SDF rate on low demand for funds from bks, thin trade
This story was originally published at 18:43 IST on 5 October 2024
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MUMBAI – The interbank call money rate ended below the Reserve Bank of India's standing deposit facility of 6.25% Saturday 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.
Saturday, the two-day call rate ended at 5.00%, against 6.25% for three-day loans on Friday. Only 64 trades worth INR 13.85 billion were settled on Saturday.
The liquidity surplus in the banking system widened to INR 2.88 trillion on Thursday, the highest since July 2022, according to RBI data. The liquidity surplus widened on account of salary and pension payments.
Outflows on account of tax deducted at source and excise duty will likely begin from Monday, worth around INR 500 billion in total, dealers said. Banks parked only INR 442.75 billion at the RBI's 14-day INR 1.75-trillion variable rate reverse repo auction on Friday.
The following are the other highlights:
* The weighted average call rate was 6.09% against 6.45% on Friday.
* The weighted average rate for triparty repo was 6.25% as compared to 6.20% on Friday.
OUTLOOK
* On Monday, the one-day call money rate may near the RBI's repo rate of 6.50% due to early demand for funds from banks to meet reserve requirements.
* Outflows for tax deducted at source and excise duty will likely drain banking system liquidity by about INR 500 billion by Tuesday.
* During the day, the call rate is seen in a range of 6.20-6.75%, dealers said.
CALL RATE
5.00%--Saturday's close for two-day loans
6.50%--Saturday'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 Manisha Baxla
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