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Informist, Saturday, Aug. 2, 2025

 

By Srijita Bose

 

MUMBAI – Lower requirement for funds amid ample liquidity surplus kept the weighted average call rate sharply below the Reserve Bank of India's Standing Deposit Facility on Saturday. Volume was muted, as is usual for Saturday. Total trade volume fell sharply to INR 10.90 billion with only 77 trades against INR 79.37 billion Friday. 

 

The two-day call money rate settled at 5.00%, down from 5.35% for three-day loans Friday. The weighted average rate ended at 4.95%, down from 5.46% Friday. The rates in the triparty repo market closed higher at 5.34%, however, the weighted average rate was at 5.10%, sharply down from 5.33% Friday.

 

Friday, rates in the money market ended higher, inching up early in the trade as the RBI held a seven-day variable rate reverse repo auction. However, they cooled off later in the day on account of more lenders and reduced borrowing needs, they added. Rates also cooled as systemic liquidity rose on month-end inflows, dealers said. 

 

As per the latest RBI data, the central bank net absorbed INR 2.86 trillion from the banking system Thursday. Banks had also increased the funds parked with the RBI as cash reserves to INR 9.96 trillion, from INR 9.73 trillion Thursday. For the current fortnight, which ends on Aug. 8, the daily average cash reserve requirement is INR 9.56 trillion.

 

Money market dealers also awaited clarity on the RBI's dollar/rupee buy-sell swaps, which are set to mature Monday, before the RBI's Monetary Policy Committee outcome Wednesday. Informist had Tuesday reported that the RBI has strong reasons to give delivery of $5 billion on its dollar/rupee buy-sell swaps, given the ample rupee liquidity in the banking system. The RBI giving delivery of the forward dollars it sold as a part of the swap would entail the central bank infusing $5 billion into the financial system while simultaneously taking out around INR 438 billion of rupee liquidity, at the current exchange rate.

 

Traders also await the RBI's new liquidity management framework, which the central bank will likely release at the Monetary Policy Committee meeting Wednesday. The framework will likely provide clear directions on the newly introduced overnight money market benchmark rate, the Secured Overnight Rupee Rate, dealers said.

 

OUTLOOK

* Monday, the one-day call money rate may open near the RBI's repo rate of 5.50% on demand for funds from banks. However, ample liquidity in the system is expected to bring down rates during the day. 

* During the day, the call rate is seen in a range of 4.70-5.50%, dealers said.

 

CALL RATE

5.00%--Saturday's close for two-day loans

4.90%--Saturday's open for two-day loans

5.35%--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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