RBI
conducts two-day VRRR as liquidity surplus nears Rs 1 trillion
The Reserve Bank of India
conducted a two-day variable rate reverse repo (VRRR) auction on Tuesday as the
liquidity surplus in the banking system neared Rs 1 trillion.
The liquidity in the banking
system was in a surplus of Rs 98,920 crore on Monday, according to the latest
data by the central bank. Consequently, the weighted average overnight money
market rates fell to 6.34 per cent on Tuesday, against 6.42 per cent on Monday.
The weighted average overnight call rate fell below the repo rate to 6.48 per
cent, against 6.51 per cent on Monday. The repo rate currently stands at 6.50
per cent.
Banks were parking funds in
the SDF, and the call rate had fallen below the repo rate, which is the reason
why the RBI came up with the auction, said a dealer at a state-owned bank.
They have said numerous times that they want to keep the overnight rates near
the repo rate, he added.
Banks parked Rs 32,576
crore, against the notified amount of Rs 50,000 crore at a weighted average
rate of 6.49 per cent at the auction.
Market participants see the
liquidity to prevail in a surplus mode in the current month.
There is ample liquidity in
the system; it should remain in the surplus at least in the current month,
said a money market dealer at a state-owned bank. There might be some crunch
because of the election, he added.
The liquidity has largely
remained in surplus in April, as compared to the previous months in the current
calendar year.
www.business-standard.com
dt. 17.04.2024