The Reserve Bank of India (RBI) received bids worth ₹62.35 billion against a notified ₹500 billion at its latest 2-day Variable Rate Repo (VRR) auction. The central bank allotted the same amount, setting both the cut-off and weighted average rate at 5.26%, reflecting muted liquidity appetite among banks.
The Reserve Bank of India’s 2-day Variable Rate Repo (VRR) auction witnessed significantly lower participation compared to the notified amount, highlighting cautious liquidity positioning by market participants.
Key Highlights
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Auction Size vs. Bids: RBI had notified ₹500 billion, but bids totaled only ₹62.35 billion.
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Allotment: The central bank allotted the entire bid amount of ₹62.35 billion.
Rates:
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Weighted Average Rate: 5.26%
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Cut-off Rate: 5.26%
Market Implication: The muted response suggests banks may be adequately funded and less inclined to borrow short-term liquidity at prevailing rates.
Liquidity Context: Such outcomes often indicate surplus liquidity conditions or limited demand for central bank funding, aligning with broader monetary stability trends.
This development underscores the RBI’s ongoing role in fine-tuning liquidity management while signaling market confidence in current funding levels.
Sources: Reserve Bank of India (RBI) auction release, India Central Bank updates.