RBI conducts 2-day VRRR auctions as liquidity in banking system nears Rs 1 trillion
Mumbai: The Reserve Bank of India on Tuesday held a two-day variable rate reverse repo (VRRR) auction due to the nearing Rs 1 trillion liquidity surplus in the banking system.
As per the central bank's latest data, the banking system's liquidity surplus stood at Rs 98,920 crore on Monday.
Consequently, on Tuesday, the weighted average overnight money market rates declined to 6.34 percent from Monday's 6.42 percent.
The weighted average overnight call rate also dropped below the repo rate to 6.48 percent, down from Monday's 6.51 percent, while the current repo rate remains at 6.50 percent.
During the auction, banks placed Rs 32,576 crore, below the notified amount of Rs 50,000 crore, at a weighted average rate of 6.49 percent.
Of late, RBI has been resorting to methods such as variable rate reverse repo (VRRR) auctions to suck out excess liquidity from the system, therefore the move was expected by the market participants.
Market observers anticipate liquidity to remain in surplus throughout the current month.
In April, liquidity has predominantly remained in surplus compared to previous months in the current calendar year.
IBNS
Senior Staff Reporter at Northeast Herald, covering news from Tripura and Northeast India.
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