Cash rates ease on lower demand

MUMBAI: Indian cash rates eased on Wednesday on the back of lower demand as banks borrowed less with their liquidity position comfortable, dealers said.

At 12:32 p.m., the interbank cash rate was at 6.65/75 percent, lower than Tuesday's close of 6.90/7.00 percent.

"Demand is definitely less. Banks have some money now," said a trader with a large private bank.

"On Monday, banks over-covered their positions, and also being the month-end, government spending happened," the trader said.

Banks' cash improves during month-end due to government spending by way of salaries that are deposited in the savings bank accounts.

Banks borrowed 539.20 billion rupees at the central bank's morning repo auction on Wednesday, against a total of 795.4 billion rupees at the RBI's twin repo auctions on Tuesday.

Volumes in the inter-bank cash market were at 64.32 billion rupees against 98.05 billion rupees on Tuesday, Clearing Corp of India data showed.

In the collateralised borrowing and lending obligation (CBLO) market, volume was 264.55 billion rupees versus 511.73 billion rupees on Tuesday.

The weighted average rate in the call money market was at 6.79 percent against 6.95 percent on Tuesday, while in the CBLO market it was at 6.50 percent down from 6.49 percent on Tuesday

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