India Call
Ends below RBI's SDF rate on low demand for funds from banks
This story was originally published at 18:28 IST on 30 November 2024
Register to read our real-time news.Informist, Saturday, Nov. 30, 2024
By Sourabh Kumar
MUMBAI – The interbank call money rate ended below the Reserve Bank of India's standing deposit facility rate of 6.25% on Saturday due to low demand for funds from banks. Volume in the call money market was low as most banks had met their funding requirements for the weekend on Friday, dealers said.
On Saturday, the two-day call rate ended at 6.00%, against 6.70% for three-day loans on Friday. Only 62 trades worth INR 12.36 billion were settled on Saturday.
The liquidity was in a deficit of INR 94.89 billion on Thursday against INR 308.48 billion on Wednesday. On Monday, the RBI will release data on banking system liquidity for Friday. Dealers expect the liquidity to be back in surplus in the first week of December due to inflows from the government's salary and pension payments. However, selling of dollars by the RBI in the foreign exchange spot market will likely keep liquidity under strain.
The RBI conducted a 14-day, INR 250 billion variable rate reverse repo auction, the response to which was tepid, with banks parking just INR 24.76 billion. Such a poor response to the 14-day variable rate reverse repo auction was due to scepticism among traders over parking money for 14 days amid uncertain liquidity conditions.
The following are the other highlights:
* The weighted average call rate was 6.22% against 6.75% on Friday.
* The weighted average rate for triparty repo was 6.48% as compared to 6.65% on Friday.
OUTLOOK
* On Monday, the one-day call money rate may open above the RBI's repo rate of 6.50% due to early demand for funds from banks to meet reserve requirements.
* During the day, the call rate is seen in a range of 6.00-6.75%, dealers said.
CALL RATE
6.00%--Saturday's close for two-day loans
6.10%--Saturday's open for two-day loans
6.70%--Friday's close for three-day loans
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Deepshikha Bhardwaj
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