MUMBAI: Indian overnight indexed cash rate eased slightly on Tuesday, although remaining well above the Reserve Bank of India's repo rate, as demand was high in the first half of the two-week reporting cycle.
At 1:19 p.m. (0750 GMT), the one-day cash rate was at 8.90/9.00 percent, compared with Monday's close of 9.00/9.05 percent.
"Demand is pretty strong as banks are building positions. Nobody is willing to lend below 8.80 percent," a trader with a state-run bank said.
Demand is typically strong in the first week of the reporting cycle as most banks prefer to meet reserve needs as soon as possible in order to cut exposure to possibly volatile funding rates in the later half due to last-minute flows.
Banks borrowed 1.13 trillion rupees ($21.24 billion) from the Reserve Bank of India's repo counter under the liquidity adjustment facility on Tuesday, up from 1.15 trillion rupees on Monday.
Traders said the cash rate is likely to soften next week as the tight liquidity condition in the banking system should ease on the back of government spending.
Call market volume was at 161.71 billion rupees, compared with a total of 206.40 billion rupees on Monday, data from the Clearing Corp of India showed.
In the collateralised borrowing and lending obligation (CBLO) market, volume was at 200.28 billion rupees, compared with a total of 296.04 billion rupees in the previous session.
The weighted average rate in the call money market was 8.94 percent, lower than 8.99 percent on Monday. In the CBLO market, the average rate rose to 8.52 percent from 8.59 percent.
In the inter-bank repo market, volumes were 64.04 billion rupees, compared with a total of 81.73 billion on Monday. The weighted average rate was 8.59 percent from 8.60 percent.
Comments
Comments are closed for this article.