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Informist, Tuesday, Jul. 7, 2026

 

By Cassandra Carvalho

 

MUMBAI – The one-day interbank call money rate ended at the Reserve Bank of India's repo rate Tuesday, the same as Monday's close, due to demand for funds amid tax outflows. Traders speculated that the RBI's intervention in the foreign exchange spot market is likely to be draining systemic liquidity, they said. The rupee appreciated Tuesday after falling in recent sessions, due to foreign inflows and intervention by the RBI. The one-day tri-party repo market ended at 6.00%, the highest since Sept. 22, on urgent demand for funds just before the market shut, dealers said. 

 

"Seems like a mutual fund was short (on funds) and tried to cover just before the market closed," a dealer at a private sector bank said. At 1559 IST, the ask rate in the tri-party repo market hit 6%, and between 1559 IST and 1600 IST, four trades were conducted at 6.00% totalling INR 200 million.

 

Expectations of some liquidity outflow in the near term increased, as contradictory to what traders were expecting, the RBI has announced two variable rate repo auctions this week. Around INR 500 billion is expected to go out of the banking system Tuesday for excise duty payments. There could be some other outflows the RBI is aware of, dealers said. After the overnight, INR-500-billion VRR was poorly subscribed at INR 11.35 billion Tuesday, post market hours, the central bank announced another VRR of INR 250 billion for Wednesday.  

 

The one-day call money rate ended at 5.25%, the same as Monday. The weighted average call rate was at 5.25%, also the same as Monday. The volume in the market was INR 178.77 billion Tuesday, against INR 177.91 billion Monday. The one-day tri-party repo rate ended at 6.00%, up from 5.13% at close Monday. The weighted average rate was 5.14%, the same as the previous day. The volume in the TREPS market was INR 4.55 trillion, slightly lower than INR 4.86 trillion in the previous session.

 

OUTLOOK

On Wednesday, the one-day interbank call money rate is seen at the RBI's repo rate of 5.25% as tax outflows are likely to drain the liquidity surplus, dealers said. Traders will also gauge any liquidity drain from intervention by the RBI in the spot rupee market. However, liquidity conditions are expected to improve in the near term as foreign currency non-resident bank deposits are expected to pick up pace. Banks hedging deposits under the central bank's concessional swap window will gain rupee liquidity, potentially easing money market rates, dealers said. Later in the week, maturity of the 8.33%, 2026 gilt with an outstanding of over INR 310 billion Thursday will also add to systemic liquidity. 

 

Dealers expect the call rate to be at 4.60–5.30% Wednesday. The tri-party repo rate is expected to be in the 4.90–5.20?nd. The weighted average call rate is expected to be in the 5.20–5.30?nd, and that in the tri-party repo market is likely to be in the 5.10–5.20?nd, they said.

 

CALL RATE

5.25%--Tuesday close for one-day loans

5.30%--Tuesday open for one-day loans

5.25%--Monday close for one-day loans

 

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	TUESDAY	MONDAY
Overnight	5.29	5.29
3-day	--	--
14-day	5.71	5.73
1-month	6.05	6.05
3-month	6.47	6.49

 

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India Call: Down near SDF as demand subsides; VRR sees poor subscription

 

MUMBAI – The one-day interbank call money rate fell from its opening level and was near the Reserve Bank of India's Standing Deposit Facility rate of 5.00?ter the usual demand from primary dealerships and some banks was met early in the day amid comfortable liquidity in the banking system, dealers said. Earlier Tuesday, the RBI conducted an overnight variable rate repo auction of INR 500 billion amid outflows of a similar size for tax payments Tuesday.

 

Demand at the overnight VRR auction was poor and bids amounted to just INR 11.35 billion as market participants found borrowing in the tri-party repo market cheaper than the cut-off rate at the auction, which is required to be above the repo rate, dealers said. The tri-party repo rate was below the RBI's repo rate in a range of 5.15%-5.16% during the auction, making it a more attractive source of funding than the VRR window, they said. 

 

"Most of the early funding demand has already been met," a dealer at a public-sector bank said. "The excise duty outflow is not large enough to tighten liquidity, and the banking system remains in surplus. That's why call rates are trading lower."

 

At 1440 IST, the one-day call rate was 5.05%, down from 5.30% at open and 5.25% Monday. The weighted average call rate was 5.26%, creeping up from 5.25% Monday. The trading volume in the overnight market was INR 131.45 billion, against INR 169.73 billion at 1430 IST Monday. At 1440 IST, the one-day tri-party rate was 5.14%, up marginally from its opening level but similar to Monday's close. The weighted average tri-party rate was 5.14%, same as Monday. The trade volume was INR 3.86 trillion, against INR 4.25 trillion at 1435 IST Monday.

 

Apart from the excise duty payment, no major outflows are scheduled in the near term that could materially affect liquidity conditions, dealers said. Given the improved liquidity conditions and overnight rates well below the RBI's repo rate of 5.25%, dealers said they do not expect the central bank to conduct another VRR auction in the days to come. "There is no need for a VRR auction at this stage. Liquidity is comfortable, and money market rates are not under any upward pressure. Even Monday's VRR auction appeared unnecessary," a dealer at another public-sector bank said.  (Shumaila Firoz)

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India Call: At repo on early demand; comfortable liquidity caps more upside 

 

MUMBAI – The one-day call money rate Tuesday was at the Reserve Bank of India's repo rate of 5.25% due to early demand for funds from primary dealerships and some banks to meet daily cash requirements, dealers said. Comfortable liquidity surplus and the RBI's overnight variable rate repo auction also capped rise in the overnight rates despite outflows for excise duty and tax deducted at source, they said.

 

At 0948 IST, the one-day call rate was at 5.25%, unchanged from Monday. The weighted average call rate was at 5.30%, up from 5.25% Monday. The volume in the overnight market was INR 62.52 billion, compared with INR 6.5 billion at 0930 IST on Monday. At the same time, the tri-party repo rate for one-day loans was at 5.15%, up from 5.13% Monday, with a volume of INR 1.83 trillion. The market volume was up from INR 1.69 trillion at 0930 IST on Monday. The weighted average rate was 5.15%, up from 5.14% Monday.   

 

The net liquidity absorbed by the RBI, which is a proxy for surplus in the banking system, was INR 1.19 trillion Monday, down from INR 1.85 trillion Sunday. Liquidity surplus fell due to outflows of INR 340 billion for gilt auction payments and a rise in cash balances by around INR 345 billion Monday. Cash balances with the RBI rose to INR 8.27 trillion from INR 7.93 trillion Sunday, against the average daily requirement of INR 7.98 trillion for the fortnight ending Jul. 15.  

 

Despite a liquidity surplus in the banking system, the RBI conducted an overnight variable rate repo auction for INR 500 billion between 0930 IST and 1000 IST Tuesday. Dealers said this VRR auction was due to outflows of around INR 500 billion for payment of excise duty and tax deducted source scheduled Tuesday and Wednesday. But dealers expect poor subscription at the auction due to enough liquidity surplus in the banking system and little amount of outflows for excise duty and tax deducted at source payments.

 

"Regular lenders who cannot meet their cash needs by borrowing in overnight market are participating in these auctions," a dealer at a small finance bank said. Probably they would need some 300 crores (INR 3 billion) and may not get full amount there (call market), so they are covering the rest here."

 

According to the median of nine estimates in an Informist poll, the subscription is expected to be at INR 125 billion, and the cut-off is seen at 5.26%. This estimate is largely similar to the three-day VRR auction for INR 750 billion conducted Monday where the subscription was only INR 146 billion. Dealers expect the weighted average call rate at 5.25-5.30% during the day.  (J. Navya Sruthi)

 

End

 

US$1 = INR 94.9675

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

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