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Informist, Wednesday, May 14, 2025

By Cassandra Carvalho

MUMBAI - The inter-bank call money rate opened below the Reserve Bank of India's repo rate of 6.00% due to comfortable liquidity in the banking system. The one-day call money rate opened at 5.90% Wednesday, for the fifth straight day, against 5.45%, the close for one-day loans on Tuesday. The weighted average rate was the same.

The triparty repo rate opened at 5.70%. Rates in the call money market are expected to be in the range of 5.70-5.95% during the day, and those in the triparty repo market are seen at 5.70-5.80%.

On Tuesday, the RBI had net absorbed INR 1.54 trillion from the banking system, slightly lower than INR 1.67 trillion on Monday. The weighted average money market rate--which is an average of call, triparty repo, and repo rate--was 5.58%, 42 basis points below the repo rate. 

"Repo (CROMS) is at 5.85%, TREPS is at 5.73%, because there's good liquidity surplus. So PDs would prefer to borrow from here rather than from VRR," a trader at a primary dealership said. "So we might see a lower subscription of around INR 3-4 thousand crores (INR 30 billion-INR 40 billion) at the VRR today (Wednesday), because there's around a 20 basis point fall in money market rates." The RBI will hold an overnight variable rate repo auction for INR 250 billion from 1000-1030 IST. Subscription is expected to be around INR 50 billion. 

Insurance companies and mutual funds were lenders in the triparty repo market, along with banks, which kept volumes on the higher end. Rates on the Clearcorp Repo Order Matching System fell to as low as 0.30% on the benchmark 10-year 6.79%, 2034 gilt. This was due to insurers lending their long-term gilts in the market, dealers said. 

No significant inflows or outflows are expected Wednesday, dealers said. The settlement of the RBI's operations in the foreign exchange spot market could be there, some dealers said. Payments for state bonds for INR 115 billion are due Wednesday.  End

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

Edited by Vandana Hingorani

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