The Reserve Bank of India’s (RBI) latest 4-day Variable Rate Repo (VRR) auction drew bids worth ₹1,589.99 billion against a notified ₹500 billion. The central bank allotted ₹500.11 billion, with a cut-off and weighted average rate of 5.27%. Partial allotment stood at 89.24%, reflecting strong liquidity appetite.
The RBI’s short-term liquidity operation through the 4-day VRR auction highlighted robust demand from banks and financial institutions. Despite bids exceeding three times the notified amount, the central bank maintained discipline, allotting only the targeted ₹500 billion.
Auction Highlights:
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Total Bids: ₹1,589.99 billion received, far surpassing the notified ₹500 billion.
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Allotment: ₹500.11 billion allotted, reflecting partial acceptance of bids.
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Partial Allotment: 89.24% at the cut-off rate.
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Cut-off Rate: Fixed at 5.27%, aligning with the weighted average rate.
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Liquidity Context: Indicates strong demand for short-term funds amid tight liquidity conditions.
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Market Impact: Reinforces RBI’s calibrated approach to liquidity management, balancing demand with monetary stability.
The auction underscores the RBI’s role in fine-tuning liquidity through VRR operations, ensuring stability in money markets while responding to heightened demand from banks. Analysts note that such strong bidding reflects prevailing liquidity pressures and the attractiveness of short-term repo instruments.
Sources: Business Standard, Economic Times, Moneycontrol, Mint