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Informist, Saturday, May 31, 2025

By Srijita Bose

MUMBAI – The two-day inter-bank call money rate ended below the Standing Deposit Facility rate of 5.75% Saturday due to low demand for funds from banks, coupled with comfortable liquidity in the banking system, dealers said. The liquidity in the banking system is expected to rise further as the government's month-end spending kicks in, they said. Total trade volume fell to just INR 11.26 billion with 66 trades against INR 155.13 billion Friday. 

The two-day call money rate ended at 5.50% against 5.75% Friday for three-day loans. The weighted average call rate was at 5.52% Saturday, down from 5.85% Friday, while the weighted average rate in the larger tri-party repo market, which includes mutual funds, was at 5.54%, against 5.83% Friday.

As of Wednesday, the banking system liquidity surplus, as reflected from the RBI's net absorption of funds from the banking system, was INR 1.80 trillion. The figure is expected to rise to around INR 2.50 trillion after the government's salary and pension payments get reflected in the banking system. 

The central bank's three-day variable rate repo auction held Friday received bids worth INR 87.21 billion. The bids in the variable repo auction, though lower than the notified amount of INR 250 billion, were a significant improvement from Thursday, when the bids were only INR 33.35 billion. A major part of the auction was likely bid by primary dealers for their cash requirement due to Friday's INR 360 billion government bond auction, dealers said. The central bank did not conduct the 14-day main operation Friday for the second consecutive time on a review of evolving liquidity conditions.

OUTLOOK

* On Monday, the one-day call money rate may open below the RBI's repo rate of 6.00% due to poor demand for funds as liquidity in the system is expected to rise on account of the government's month-end spending.

* During the day, the call rate is seen in a range of 5.50-5.90%, dealers said.

* RBI will hold an overnight variable rate repo auction for INR 250 billion at 1000-1030 IST.

CALL RATE

5.50%--Saturday's close for two-day loans

5.90%--Saturday's open for two-day loans

5.75%--Friday's close for three-day loans

End

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

Edited by Deepshikha Bhardwaj

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