RBI absorbs Rs 46,058 crore via 3-day VRRR auction at 5.49% cut-off
This short-term liquidity absorption tool remains central to the RBI's strategy for aligning money market rates with its policy objectives. The latest auction follows several recent interventions, including a seven-day VRRR on July 25 that absorbed Rs 1,25,008 crore, a two-day VRRR on July 23 that drew Rs 50,001 crore, and a seven-day operation on July 18 that mopped up Rs 2,00,027 crore.
On July 11, the RBI accepted Rs 1,51,633 crore in a seven-day auction, and Rs 97,315 crore in a two-day auction on July 9. On July 4, the central bank absorbed Rs 1,00,010 crore. On June 27, Rs 84,975 crore was absorbed.
The RBI has been actively using short-term VRRR operations to neutralise excess liquidity that built up following its record Rs 2.69 lakh crore dividend payout to the Centre and a recent cash reserve ratio (CRR) cut. Market participants have largely bid in line with expectations, with most operations clearing close to the 5.49% mark.
Through these VRRR auctions, the central bank aims to fine-tune liquidity conditions and ensure that short-term interest rates remain anchored to the policy repo rate, thereby promoting effective monetary transmission while containing volatility in the interbank market.
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