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Informist, Thursday, Jun. 4, 2026

 

By Durgesh Nandan

 

MUMBAI – The one-day interbank call money rate Thursday ended below the Reserve Bank of India's repo rate of 5.25% as demand fell later in the day due to lack of major outflows scheduled for the day, dealers said. However, the weighted average call rate remained above the RBI's repo rate of 5.25% due to initial borrowings at a high rate, they added.

 

The RBI's MPC meeting decision will be in focus on Friday, wherein the rate-setting panel is largely expected to keep the repo rate steady and retain its 'neutral' stance. Commentary of the rate-setting panel is expected to set the stage for repo rate hikes later in 2026. A few traders expect the RBI to announce liquidity measures, including dollar-rupee buy-sell swaps or open market operation auctions. However, most traders expect the central bank to announce measures to shore up foreign capital to limit the depreciation of the rupee. Such measures would effectively boost systemic rupee liquidity, thereby pulling down call money rates, dealers said.  

 

The one-day call rate ended at 5.20% on Thursday, up from 4.75% Wednesday. The weighted average call rate was 5.27%, same as the previous day. The traded volume in the call money market was INR 182.89 billion, up from INR 162.35 billion in the previous session. 

 

The one-day tri-party repo rate ended at 5.00%, up from 4.80% Wednesday. The weighted average rate in the tri-party repo market was 5.04%, lower than 5.13% Wednesday. The tri-party repo market's total volume was INR 4.76 trillion Thursday, down from INR 5.01 trillion Wednesday. "In the second half of the day, there were more lenders in the (tri-party) market than borrowers and that was the reason behind the low volume and rate in the TREPs (tri-party repo market) today (Thursday)," a dealer at a state-owned bank said.

 

The net liquidity absorbed by the RBI--an indication of surplus liquidity--was INR 1.71 trillion Wednesday, up from INR 1.12 trillion Tuesday, according to the latest release. The net liquidity absorption indicates surplus liquidity in the banking system. Banks shifted their surplus amount from cash balances to the Standing Deposit Facility with the RBI to get a 5.00% return on the cash, a dealer at another state-owned bank said. Banks kept INR 8.01 trillion with the RBI Wednesday, down from INR 8.70 trillion Tuesday.

 

Most dealers expect the RBI to conduct a three-day variable rate repo auction Friday for INR 1 trillion as a reversal worth INR 288.00 billion is scheduled, and outflows for tax payments are lined up. Earlier this week, the RBI conducted two VRR auctions for three-day and two-day on Tuesday and Wednesday, respectively.  

 

A few dealers said the central bank would not conduct a VRR auction Friday as banks were comfortable with the surplus liquidity and rates were near the RBI's Standing Deposit Facility rate of 5.00% in both the markets in the second half of the day.  

 

OUTLOOK

On Friday, the three-day interbank call money rate is likely to open above the RBI's repo rate of 5.25%, as has been the case so far this week as with surplus liquidity generally on a downtrend, dealers said. Dealers expect the call rate to be in the 4.60–5.45% range. The tri-party repo rate is expected to be in the range of 4.90–5.30%. The weighted average call rate is expected to be in the range of 5.20-5.30%, and the weighted average rate in tri-party repo market is likely to be around 5.00-5.10%, they said.

 

The reversal of two-variable rate repo auctions for INR 288 billion is scheduled for Friday, which is expected to drain liquidity. Dealers expect a VRR auction Friday to compensate for the impact of the payments for the two VRR auctions.

  

CALL RATE

5.20%--Thursday close for one-day loans

5.35%--Thursday open for one-day loans

4.75%--Wednesday close for one-day loans

 

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	THURSDAY	WEDNESDAY
Overnight	5.33	5.33
3-day	--	--
14-day	5.92	5.91
1-month	6.13	6.09
3-month	6.80	6.80

 

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India Call: Falls below repo rate after mkt participants meet early demand

 

MUMBAI – The one-day interbank call money rate fell below the Reserve Bank of India's repo rate of 5.25% as demand for funds declined after market participants met their cash requirements, dealers said. However, the weighted average call rate remained above the repo rate due to initial borrowing from primary dealerships and some banks at higher rates. 

 

At 1315 IST, the one-day call rate was at 5.10%, down from 5.35% at open but up from Wednesday's close of 4.75%. The weighted average call rate was 5.32%, up from 5.27% Wednesday. The one-day call money trade volume was INR 149.21 billion, up from INR 122.02 billion Wednesday at 1230 IST. Till noon, the call rate traded in a wide range of 4.75-5.40%. 

 

"Weighted average call rate (for Thursday) will fall between 5.25-5.30% as most of the volumes will be traded till 0300 IST, so after that, the rate is expected to fall as (surplus) liquidity is comfortable," a dealer at a public sector bank said.

 

At 1315 IST, the one-day tri-party repo was 5.01%, down from 5.10% at open but higher than 4.80% at Wednesday's close. The one-day tri-party weighted average rate was 5.07%, lower than 5.13% Wednesday. The turnover in the tri-party repo market was INR 3.67 trillion, up from INR 3.53 trillion Wednesday at 1230 IST. The tri-party repo rate was in a narrow band of 4.99-5.14% till noon. 

 

The net liquidity absorbed by the RBI -- an indication of surplus liquidity -- was INR 1.71 trillion Wednesday, up from INR 1.12 trillion Tuesday, according to the latest release. The liquidity surplus rose as banks transferred cash from the cash reserve ratio to the Standing Deposit Facility for 5% interest rate on their surplus amount, a dealer at another state-owned bank said.

 

Cash balances with the RBI fell to INR 8.01 trillion Wednesday from INR 8.70 trillion Tuesday. The cash balances with the RBI were up sharply from the average requirement of INR 7.91 trillion for the fortnight ending Jun. 15.

 

Dealers were divided about whether the RBI would conduct a variable rate auction Friday on the back of the reversal of two VRR auctions conducted earlier this week. Most dealers expect the RBI to conduct a VRR Friday due to the reversal of INR 288 billion transient liquidity infused through two VRR auctions. A few dealers said the market is comfortable with the call rate and surplus liquidity, so it is unlikely for the RBI to conduct any VRR auction. 

 

"If we see the trend, the RBI conducts VRR (auction) when (surplus) liquidity falls below 1 lakh crore (INR 1 trillion) and call rate rises above 5.45%," a dealer at a small finance bank said. "And the current condition does not support the trend, so they (the RBI) will not conduct any VRR (auction)."  (Durgesh Nandan)

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India Call: Up as primary dealerships, some bks borrow to meet early demand

 

MUMBAI – Early demand for funds from primary dealerships and some banks led to a rise in the one-day interbank call money market rate Thursday, dealers said. Higher overnight index swap rates and Mumbai Interbank Offer Rate kept the call rate above the Reserve Bank of India's repo rate of 5.25?spite a liquidity surplus, they said. 

 

"The MIBOR (Mumbai Interbank Offer Rate) rate is continuously trading at 5.35%, which sets the trend for other rates, and yesterday (Wednesday) OIS (overnight index swap rates) rates were also high, so all these factors have kept the call rate higher," a dealer at a private sector bank said.

 

The call money rate opened above the Reserve Bank of India's repo rate of 5.25% at 5.35% for four consecutive days. The rates in both call and tri-party repo markets are expected to be similar as Wednesday due to the lack of major scheduled outflows for the day, so the rates are likely to ease later in the day, dealers said. During the day, the call rate is seen at 4.80–5.35% on the back of ample surplus liquidity in the banking system, dealers said.

 

At 0930 IST, the one-day call rate was 5.35%, sharply up from 4.75% Wednesday. The weighted average call rate was also 5.35%, up from 5.27% Wednesday. Trade volume in the call money market was INR 66.27 billion, higher than INR 65.54 billion at the same time Wednesday. At 0930 IST, the one-day tri-party repo rate was 5.08%, up from 4.80% Wednesday. The weighted average tri-party repo rate was 5.10%, down from 5.13% Wednesday. The volume in the tri-party repo market was INR 1.21 trillion, up from INR 987.72 billion Wednesday. 

 

The net liquidity absorbed by the RBI was INR 1.71 trillion Wednesday, up from INR 1.12 trillion Tuesday, according to the latest release. The absorption is an indication of surplus liquidity in the banking system. Liquidity surplus grew as cash balances with the RBI fell to INR 8.01 trillion Wednesday from INR 8.70 trillion Tuesday. The average daily requirement of cash balances for the fortnight ending Jun. 15 is INR 7.91 trillion.

 

It is unlikely for the RBI to conduct a variable rate repo auction Thursday as call and tri-party rate are likely to ease during the day, dealers said. "They can conduct an auction tomorrow (Friday) but not today (Thursday) as two reversals are scheduled, and the RBI will maintain the (surplus) liquidity near 2 lakh crore (INR 2 trillion)," a dealer at a public-sector bank said.  (Durgesh Nandan)

 

End

 

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

 

Edited by Avishek Dutta

 

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