Image Source : PSU Connect
RBI conducted a 2-day Variable Rate Repo (VRR) auction today, receiving bids worth ₹1,437.18 billion against a notified ₹2,000 billion, allotting the full amount at a weighted average rate of 5.26% with a cut-off of 5.26%. This reflects measured liquidity absorption amid ample system reserves.
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Auction Details
The Reserve Bank targeted ₹2,000 billion through the VRR to fine-tune liquidity following yesterday's ₹7.24 trillion bank cash balances. Lower-than-expected bids indicate banks' preference for holding surpluses, aligning with recent refinance ops of ₹107.81 billion and MSF usage at ₹34.13 billion. The 5.26% rate remains below repo at 6.50%, signaling accommodative stance.
Key Highlights
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Bid Subscription: ₹1,437.18 billion received vs ₹2,000 billion notified; 72% undersubscription shows liquidity comfort.
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Allotment: Full ₹1,437.18 billion accepted at weighted average 5.26%; cut-off fixed at 5.26%.
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Auction Tenure: 2-day VRR to manage short-term surpluses without disrupting credit flow.
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Market Context: Complements RBI's ₹7.24 trillion reserves; supports Nifty's intraday rebound (+0.02%) and stable 10Y yield (6.5976%).
Liquidity Outlook
RBI's calibrated ops anchor stability ahead of year-end; next auctions eyed for demand cues.
Sources: Reuters (RTRS), RBI Press Release
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