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Business Standard
11-07-2025
- Business
- Business Standard
RBI likely to replace WACR with TREPS as operative target, says Nomura
The Reserve Bank of India (RBI) is likely to shift its operative target for liquidity management from the unsecured Weighted Average Call Rate (WACR) to a secured rate such as TREPS or a SORR-like composite, according to a report by Nomura. The RBI is reviewing its Liquidity Management Framework (LMF). RBI Governor Sanjay Malhotra had said in the post-policy press briefing in April, 'Currently, regarding the liquidity framework, we are primarily focused on the overnight rate in the money market. We are evaluating whether it should remain the same for policy transmission purposes, or if we should target something else. We are consulting with various stakeholders and will announce our decision shortly.' The report stated that the shift would align with increased volumes in the secured money markets and bring India's framework closer to global best practices. However, such a move would require more proactive liquidity fine-tuning by the central bank, especially since mutual funds, key players in the secured market, do not have access to the RBI's standing facilities. 'We believe a shift in the operative target is likely, from the unsecured weighted average call rate (WACR) to a secured rate (TREPS or SORR-like composite), in line with increased volumes in the secured markets. This would be consistent with global best practices but require more proactive liquidity fine-tuning by the RBI, since mutual funds do not have access to the RBI's standing facilities,' the report said. Nomura added that the proposed shift to a secured rate would offer a more accurate representation of short-term funding conditions due to wider market participation. The firm does not expect any change to the policy rate itself, as the review is operational rather than directional. It continues to forecast 50 basis points of cumulative repo rate cuts in the fourth quarter of 2025, with the RBI maintaining surplus liquidity conditions to aid transmission. The RBI may not announce any quantitative targets such as maintaining liquidity within ±1 per cent of Net Demand and Time Liabilities (NDTL), the report said. The difficulty in forecasting day-to-day liquidity and the need to retain flexibility are likely to prevent the adoption of strict quantitative thresholds. However, the desired liquidity stance is expected to remain aligned with the broader monetary policy cycle to support effective transmission. The report also highlighted other operational tweaks that may be under consideration. These include lowering the daily minimum Cash Reserve Ratio (CRR) requirement from 90 per cent to around 80 per cent, providing banks with additional flexibility. The central bank may also switch the primary liquidity operation tool to a 7-day Variable Rate Reverse Repo (VRRR/VRR) from the current 14-day tenor. No changes are anticipated in the policy corridor width of 50 basis points, collateral norms, eligible participants, or the central bank's standing facilities such as the Standing Deposit Facility (SDF) and Marginal Standing Facility (MSF).
Time Out
11-07-2025
- Entertainment
- Time Out
Hong Kong's first Hot Air Balloon Festival to lift off this summer
If you've always wanted to visit Cappadocia in Turkey to witness their famous hot air balloons filling the sky, here's your chance to experience a slice of the same magic right here on home turf. The AIA International Hot Air Balloon Fest Hong Kong (HABFest) is our city's first international-scale hot air balloon event, and it's bound to be a blast. From Albuquerque's balloon fiesta in New Mexico and the balloons that float over Luxor to offer great views of Egypt's ancient temples and the Nile, to Asia's largest balloon festival in Saga, Japan, hot air balloons have always held a special place in adventurous hearts worldwide. Hong Kong's HABFest will feature distinctive balloons from all over the world, including Canada, the UK, Germany, and Japan. There will be six large balloons measuring up to 20 metres in height, as well as over 10 smaller ones around 11 metres tall – and even a tailor-made panda-shaped balloon created specially for our city. Depending on the weather, there might also be rides on a large tethered hot air balloon! After seeing these balloons filling the sky against our iconic cityscape, stick around for the Hot Air Balloon Night Glow Show, which features live music performances by a star-studded lineup of some of Hong Kong's beloved musicians, including Joey Yung, Leo Ku, Kay Tse, Louis Cheung, Gin Lee, ToNick, Kenny Kwan, LMF, and more. The festival will also be set up like a carnival, with game booths, food stalls, and retail outlets. In addition, sporty participants can join the AIA Balloon Run, a charity fun run on September 6 along the coastline with hot air balloons framing the harbour view – all proceeds will be donated to Outward Bound Hong Kong to support youth development initiatives. The HABFest will run from September 4 to 7 at the Central Harbourfront Event Space. Tickets are now on sale, ranging from $150 to $1,480, with concessions available along with family package discounts. A limited amount of early-bird tickets will be available until August 10. Check out the official website for more details.
