Latest news with #VariableRateReverseRepo
&w=3840&q=100)
Business Standard
a day ago
- Business
- Business Standard
RBI to hold overnight VRRR auction to absorb ₹50,000 crore liquidity
RBI to conduct overnight VRRR auction on Thursday to absorb Rs 50,000 crore as call and Tri-party repo rates remain below policy rate amid liquidity surplus Mumbai The Reserve Bank of India (RBI) on Wednesday announced a Rs 50,000 crore overnight Variable Rate Reverse Repo (VRRR) auction to be conducted on Thursday. The RBI's VRRR operations aim to absorb surplus liquidity from the banking system and anchor short-term rates closer to the policy repo rate. The overnight weighted average call rate (WACR) settled at 5.37 per cent, compared to the previous day's close of 5.38 per cent, while the overnight Tri-party repo rate settled at 5.33 per cent, up from 5.30 per cent on Tuesday. WACR is the operating target of the monetary policy, which the central bank aims to keep close to the repo rate. On Tuesday, net liquidity in the banking system stood at a surplus of Rs 2.68 trillion, according to the latest data from the RBI. The RBI had received bids worth Rs 46,058 crore against a notified amount of Rs 50,000 crore at the three-day VRRR auction on Tuesday. The central bank accepted the bid amount at a cut-off rate of 5.49 per cent.
&w=3840&q=100)
Business Standard
2 days ago
- Business
- Business Standard
Rupee weakens to over four-month low on importers' US dollar demand
The rupee weakened to a more than four-month low on Tuesday, weighed down by strong dollar demand from importers ahead of month-end payment obligations. Dollar purchases by state-owned banks further pressured the local currency, said dealers. Sentiment was also dampened by uncertainty over the outcome of US–India trade negotiations, with the approaching 1 August deadline adding to investor caution. The rupee settled at 86.82 per dollar, its lowest level since 13 March this year, when the domestic currency had breached the 87-per-dollar mark. On Monday, the rupee had settled at 86.67 per dollar. 'There was importer demand for dollars. Some PSU banks were also buying,' said a dealer at a private bank. 'The sentiment has been down for the past two weeks now because of uncertainty around trade deals with the US,' he added. The rupee has depreciated by 1.37 per cent so far in the current month, and 3.74 per cent against the greenback in the calendar year to date. 'Foreign portfolio outflows put pressure on the rupee. There is resistance seen at 86.90 per dollar, with the RBI containing the excess volatility,' said the treasury head at a private bank. Meanwhile, the Reserve Bank of India (RBI) received bids worth Rs 46,058 crore against a notified amount of Rs 50,000 crore at the three-day Variable Rate Reverse Repo (VRRR) auction. The central bank accepted the bid amount at a cut-off rate of 5.49 per cent. 'The amount of bids was on expected lines,' said a dealer at a state-owned bank. 'The amount was lower compared to previous auctions; hence, it was almost absorbed,' he added. In the money markets, the weighted average overnight call rate—the operating target of monetary policy—rose to 5.38 per cent from the previous day's 5.35 per cent. The overnight triparty repo (TREPS) rate settled at 5.30 per cent, against 5.26 per cent on Monday. Net liquidity in the banking system stood in surplus at Rs 2.23 trillion on Monday, according to the latest RBI data. 'The aim is to keep rates between the SDF and the repo rate. The overnight TREPS rate was again trading near the SDF. To avoid further decline, the RBI came up with the small VRRR auction, like they did with the VRR when the rates moved beyond the MSF,' said a dealer at a primary dealership. The RBI had conducted two Variable Rate Repo (VRR) auctions in the past week after overnight money market rates rose beyond the repo rate. The RBI's VRR auctions led to a decline in these rates, which had been trading above the MSF rate of 5.75 per cent. The marginal standing facility (MSF) rate, set 25 basis points above the policy repo rate, acts as the ceiling of the liquidity adjustment facility (LAF) corridor. The standing deposit facility (SDF), 25 basis points below the repo rate, is the floor. The policy repo rate is currently at 5.5 per cent.
&w=3840&q=100)
Business Standard
3 days ago
- Business
- Business Standard
RBI to conduct 3-day VRRR auction Tuesday to absorb ₹50,000 crore
The Reserve Bank of India (RBI) on Monday announced a ₹50,000 crore Variable Rate Reverse Repo (VRRR) auction for a three-day tenor, to be conducted on Tuesday. 'Given overnight rates have again fallen as liquidity is coming back into the system, the auction was announced,' said the treasury head at a private bank. 'The notified amount should be absorbed,' he added. The overnight Weighted Average Call Rate (WACR) settled at 5.35 per cent, against the previous day's close of 5.39 per cent, while the overnight tri-party repo rate settled at 5.26 per cent, compared to 5.32 per cent on Friday. The RBI's VRRR operations are aimed at absorbing surplus liquidity from the system and anchoring short-term rates nearer the policy repo rate. On Sunday, net liquidity in the banking system stood at a surplus of ₹2.48 trillion, according to the latest data from the RBI. A liquidity surplus of around ₹3 trillion has kept the overnight WACR close to the Standing Deposit Facility (SDF) rate of 5.25 per cent and below the policy repo rate of 5.50 per cent during the month. Tri-party repo rates also dipped below the SDF rate, prompting the RBI to conduct two VRRR auctions last week. 'The RBI wants to keep overnight rates above the SDF and near the repo rate,' said a dealer at a state-owned bank. 'The VRRR auctions will continue for now because government spending will kick in, which will weigh on overnight rates,' he added. The RBI received bids worth ₹1.42 trillion against a notified amount of ₹1.25 trillion at the seven-day VRRR auction on Friday. The strong demand followed the reversal of ₹2 trillion that banks had parked with the RBI in the previous week. The central bank accepted the entire amount at a cut-off rate of 5.49 per cent.
&w=3840&q=100)
Business Standard
6 days ago
- Business
- Business Standard
RBI's 7-day VRRR receives significant demand due to reversal of ₹2 trillion
The Reserve Bank of India (RBI) received bids worth Rs. 1.42 trillion against a notified amount of Rs. 1.25 trillion at the seven-day Variable Rate Reverse Repo (VRRR) auction on Friday. The significant demand at the auction was driven by the previous week's reversal of Rs. 2 trillion that banks had parked with the RBI. The central bank accepted the notified amount at a cut-off rate of 5.49 per cent. 'The demand was there because of the reversal of Rs. 2 trillion,' said a dealer at a state-owned bank. 'Given that money market rates have softened again, VRRR auctions are expected to continue,' he added. The RBI had conducted two variable rate repo (VRR) auctions during the week after overnight money market rates rose above the repo rate. The RBI's two-day VRR auction, conducted on Wednesday, led to a decline in overnight money market rates, which had been trading above the MSF rate of 5.75 per cent. The marginal standing facility rate, set 25 bps above the policy repo rate, is the ceiling of the liquidity adjustment facility corridor. The standing deposit facility, which is 25 bps below the repo rate, is the floor. The policy repo rate is currently at 5.5 per cent. Market participants said that the fine-tuning via VRR auctions became necessary due to the large withdrawal during a week of liquidity stress. Next week, the RBI may not need a VRR, as government spending typically picks up in the last week of the month, they said. 'We don't expect more VRRs now, but a similar situation could arise around September 15 during tax outflows. The RBI might come back with VRR again around that time,' said a dealer at a primary dealership.
Business Standard
22-07-2025
- Business
- Business Standard
WACR breaches repo rate for first time in FY, GST outflows contribute
The weighted average overnight call rate (WACR) rose above the Reserve Bank of India's (RBI's) policy repo rate of 5.5 per cent on Tuesday for the first time in the current financial year, amid Goods and Services Tax (GST) outflows. The WACR settled at 5.62 per cent, up from the previous close of 5.48 per cent. The weighted average overnight TREPS (Triparty repo) rate settled at 5.69 per cent, up from 5.51 per cent on Monday. Banking system liquidity was in surplus by Rs 2.39 trillion on Monday, around 1 per cent of banks' net demand and time liabilities (NDTL), according to the latest data from the central bank. The RBI has been conducting variable rate reverse repo auctions to absorb liquidity from the system. The WACR is the operating target of monetary policy, and the central bank aims for it to align with the policy repo rate. The RBI has stated its intent to maintain a liquidity surplus of 1 per cent of NDTL. 'The overnight money market rates are rising because of GST outflows,' said a dealer at a primary dealership. 'The liquidity is near 1 per cent of NDTL, meaning no more VRRRs are needed at the moment. They (RBI) might return with VRRRs at the start of the month when government spending kicks in,' he added. 'If the RBI does come up with a VRRR auction, the amount will be small, and it will be negative for the market,' said a dealer at another primary dealership. The RBI received bids worth Rs 2.07 trillion against the notified amount of Rs 2 trillion at the seven-day Variable Rate Reverse Repo (VRRR) auction on Friday, which coincided with the maturity of the previous Rs 2.07 trillion VRRR auctions. Banks largely rolled over these funds into the new auction, said dealers. The RBI has been conducting a series of VRRR auctions since the last week of June, as a net surplus liquidity of above Rs 3 trillion in the banking system had kept the overnight weighted average call rate near the SDF rate of 5.25 per cent and below the repo rate of 5.50 per cent, with TREPS rates also slipping below the SDF for the past month.
