Cash rates steady as liquidity improves
MUMBAI: Indian cash rates were largely steady on Friday, as liquidity conditions improved significantly, reflecting a pick-up in government spending, traders said.
At 1.15 p.m., the interbank cash rate, was at 6.55/60 percent, compared with 6.60/65 percent at the previous close.
"Liquidity has improved as government spending has eased up the situation. You can see the collateralised borrowing and lending obligation (CBLO) rates are also low. This fortnight I see call rates ranging from between 6.50 and 6.80," said a trader with a large state-owned bank.
The improvement in liquidity is evident from the decline in banks' borrowing from the Reserve Bank of India's repo window.
Banks borrowed 257.7 billion rupees at the central bank's three day morning repo auction on Friday, against a total of 446.25 billion rupees via twin auctions on Thursday.
Banks had been borrowing on an average around 800 billion rupees daily from the central bank's repo window since November.
"On 7th there will be excise tax outflows which will be around 90 billion rupees from the system," the trader said.
Dealers, however, expect the liquidity situation to tighten once again in March when tax outflows and certificate of deposit redemptions are due.
Volumes in the inter-bank cash market were at 71.35 billion rupees on Friday against a total of 78.51 billion rupees on Thursday, the Clearing Corp of India data showed.
In the collateralised borrowing and lending obligation (CBLO) market, volume was 442.95 billion rupees versus 686.75 billion rupees on Thursday.
The we! ighted a verage rate in the call money market was 6.58 percent on Friday, compared with 6.57 percent on Thursday, while in the CBLO market it was at 6.40 percent lower than 6.41 percent at the previous close.
At 1.15 p.m., the interbank cash rate, was at 6.55/60 percent, compared with 6.60/65 percent at the previous close.
"Liquidity has improved as government spending has eased up the situation. You can see the collateralised borrowing and lending obligation (CBLO) rates are also low. This fortnight I see call rates ranging from between 6.50 and 6.80," said a trader with a large state-owned bank.
The improvement in liquidity is evident from the decline in banks' borrowing from the Reserve Bank of India's repo window.
Banks borrowed 257.7 billion rupees at the central bank's three day morning repo auction on Friday, against a total of 446.25 billion rupees via twin auctions on Thursday.
Banks had been borrowing on an average around 800 billion rupees daily from the central bank's repo window since November.
"On 7th there will be excise tax outflows which will be around 90 billion rupees from the system," the trader said.
Dealers, however, expect the liquidity situation to tighten once again in March when tax outflows and certificate of deposit redemptions are due.
Volumes in the inter-bank cash market were at 71.35 billion rupees on Friday against a total of 78.51 billion rupees on Thursday, the Clearing Corp of India data showed.
In the collateralised borrowing and lending obligation (CBLO) market, volume was 442.95 billion rupees versus 686.75 billion rupees on Thursday.
The we! ighted a verage rate in the call money market was 6.58 percent on Friday, compared with 6.57 percent on Thursday, while in the CBLO market it was at 6.40 percent lower than 6.41 percent at the previous close.
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