RBI announces 7-day repo and increases quantum compared to last week
The Reserve Bank of India (RBI) will conduct a seven-day repo for Rs 1.75 trillion ($21.02 billion) against the expiring figure of one trillion rupees
India's central bank will hold a floating rate repo auction (VRR) for the second week in a row on December 22, this time with a higher amount of infusions, after assessing “current and evolving liquidity conditions”, the central bank said bank Thursday.
The Reserve Bank of India (RBI) will conduct a seven-day repo for Rs 1.75 trillion ($21.02 billion) against the expiring figure of one trillion rupees.
Earlier in the day, Reuters reported that market participants expect the central bank to provide a new round of short-term cash injections as the banking system's liquidity shortage reaches levels last seen in 2016.
Outflows into advances on tax payments and goods and services taxes have tightened liquidity and the situation is likely to remain unchanged till the end of the month, traders said.
The banking system's liquidity deficit rose to Rs 2.27 trillion on December 20, the highest level since April 1, 2016.
Despite last week's repo infusion, the weighted average interbank calling rate has remained above the Marginal Standing Facility rate of 6.75% this week.
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First print: December 21, 2023 | 6:33 PM IST