Latest news with #VRRR
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Business Standard
6 days ago
- Business
- Business Standard
RBI sees tepid demand at overnight VRR Auction ahead of ₹2 trn reversal
The Reserve Bank of India received tepid demand at its overnight Variable Rate Repo (VRR) auction on Thursday, with bids amounting to Rs 1,421 crore against a notified amount of Rs 50,000 crore. Market participants said that the bids were lower because of the reversal of VRRR funds worth Rs. 2 trillion on Friday. 'It was an overnight auction, and there is a reversal of Rs 2 trillion tomorrow (Friday), that's why there was no demand at the VRR auction,' said V R C. Reddy, head of treasury at Karur Vysya Bank. 'The RBI may have anticipated that overnight rates would remain elevated today, which likely prompted the auction. Their objective is to keep the overnight rate within the Standing Deposit Facility (SDF)–repo corridor, and not near the Marginal Standing Facility (MSF),' he added. The marginal standing facility rate, set 25 bps above the policy repo rate, is the ceiling of the liquidity adjustment facility corridor. The standing deposit facility, which is 25 bps below the repo rate, is the floor. The policy repo rate is currently at 5.5 per cent. The RBI's two-day VRR auction conducted on Wednesday led to a decline in overnight money market rates, which had been trading above the MSF rate of 5.75 per cent. Market participants said that fine-tuning via VRR auctions became necessary due to the large withdrawal during a week of liquidity stress. Next week, the RBI may not need a VRR because government spending typically picks up in the last week of the month, they said. 'The banks needed funds after parking Rs 2 trillion at the seven-day VRRR auction last Friday; hence the VRR auction was conducted,' said the treasury head at a private bank. 'Next week, when government spending kicks in, we won't need VRRs,' he added. After government spending resumes in early August, VRRRs are expected to continue given the significant surplus liquidity in the banking system, said market participants. The net liquidity in the banking system was in a surplus of Rs 2.17 trillion on Wednesday, the latest data from the RBI showed.
Time of India
22-07-2025
- Business
- Time of India
India bonds flat as traders look ahead to RBI policy; liquidity ebbs
Indian government bonds remained stable. Traders avoided major new investments before the upcoming monetary policy review. Banking system liquidity tightened. The yield on the benchmark 10-year bond was at 6.2993%. The Reserve Bank of India's next monetary policy decision is due on August 6. Some traders anticipate another rate cut. Overnight index swap rates remained rangebound in early deals. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Indian government bonds tiptoed sideways on Tuesday as traders refrain from entering big new positions before next month's monetary policy review and as banking system liquidity yield on the benchmark 10-year bond was at 6.2993% as of 10:45 a.m. IST, compared with Monday's close of 6.2996%.Bond yields move inversely to prices."Liquidity is a bit tight after 2 trillion rupees were parked in the central bank's VRRR auction, so we are not taking a view right now," a trader at a private bank banking system liquidity surplus stood at around 2.4 trillion rupees as on July 21, the lowest level in seven weeks, which has pushed up overnight Delhi will sell 300 billion rupees ($3.48 billion) of the benchmark 2035 paper on 10-year benchmark yield will likely oscillate between 6.29%-6.32% till the central bank policy announcement, traders next monetary policy decision from the central bank is due on August 6, with some traders anticipating another rate Reserve Bank of India slashed its key interest rate by 50 basis points last month, while changing its stance to "neutral" from "accommodative", which soured sentiment as market participants looked at the moves as limiting room for more easing.A lower-than-expected June inflation reading however, revamped expectations for further rate cuts. Retail inflation eased to 2.10%, the slowest pace in over six overnight index swap rates remained rangebound in early deals, with slight upward pressure after heightened receiving bias on one-year OIS rate inched up to 5.49%, while the two-year OIS rate was little changed at 5.46%. The liquid five-year OIS rate also edged higher to 5.69%.
Economic Times
22-07-2025
- Business
- Economic Times
India bonds flat as traders look ahead to RBI policy; liquidity ebbs
Indian government bonds tiptoed sideways on Tuesday as traders refrain from entering big new positions before next month's monetary policy review and as banking system liquidity tightened. ADVERTISEMENT The yield on the benchmark 10-year bond was at 6.2993% as of 10:45 a.m. IST, compared with Monday's close of 6.2996%. Bond yields move inversely to prices. "Liquidity is a bit tight after 2 trillion rupees were parked in the central bank's VRRR auction, so we are not taking a view right now," a trader at a private bank said. India's banking system liquidity surplus stood at around 2.4 trillion rupees as on July 21, the lowest level in seven weeks, which has pushed up overnight rates. New Delhi will sell 300 billion rupees ($3.48 billion) of the benchmark 2035 paper on Friday. ADVERTISEMENT The 10-year benchmark yield will likely oscillate between 6.29%-6.32% till the central bank policy announcement, traders said. The next monetary policy decision from the central bank is due on August 6, with some traders anticipating another rate cut. ADVERTISEMENT The Reserve Bank of India slashed its key interest rate by 50 basis points last month, while changing its stance to "neutral" from "accommodative", which soured sentiment as market participants looked at the moves as limiting room for more easing. A lower-than-expected June inflation reading however, revamped expectations for further rate cuts. Retail inflation eased to 2.10%, the slowest pace in over six years. ADVERTISEMENT RATES India's overnight index swap rates remained rangebound in early deals, with slight upward pressure after heightened receiving bias on Monday. The one-year OIS rate inched up to 5.49%, while the two-year OIS rate was little changed at 5.46%. The liquid five-year OIS rate also edged higher to 5.69%. (You can now subscribe to our ETMarkets WhatsApp channel)
Economic Times
18-07-2025
- Business
- Economic Times
India bonds flat, traders eye debt supply for cues
Indian government bonds remained steady, holding a key level ahead of New Delhi's debt sale and the RBI's cash withdrawal operation. Sentiment was aided by expectations of strong demand in the auction and a fall in U.S. yields. The focus is on the demand for the shorter-end bonds and potential liquidity tightening due to GST and the RBI's VRRR auction. Tired of too many ads? Remove Ads Bond yields move inversely to prices. Tired of too many ads? Remove Ads RATES Indian government bonds were steady in early deals on Friday, clinging to a key level ahead of New Delhi's debt sale and the central bank's cash withdrawal yield on the benchmark 10-year bond was at 6.2993% as of 10:00 a.m. IST, compared with the previous close of 6.3010%."We are expecting a strong demand in the auction, which is aiding sentiment. If the auction goes well, we can see a further rally in bonds," a trader at a primary dealership said."U.S. yields have come down, and there has been some buying from foreign banks, which is supporting the market."The yield on the U.S. 10-year bond fell 3 basis points to 4.4354% in Asian hours, compared with Thursday's close of 4.4630%.New Delhi will sell bonds worth 270 billion rupees ($3.14 billion), which includes a new five-year paper and a 30-year bond Focus will be on the demand for the shorter-end, which will reflect in the cut-off price of the new five-year, traders also expect some liquidity tightening due to cash outflows related to GST and the Reserve Bank of India 's variable rate reverse repo (VRRR).The RBI will conduct a seven-day VRRR auction worth 2 trillion rupees on may push the weighted average interbank call money rate to around 5.50%, closer to the repo rate as intended by the central daily average liquidity surplus in the banking system dropped close to 2.9 trillion rupees this week, versus 3.5 trillion rupees last week, RBI data shorter-duration overnight index swap rates (OIS) were not traded yet, while the 5-year rate inched lower, tracking a decline in U.S. Treasury yields The one-year OIS rate was at 5.51% and the two-year OIS rate was at 5.48%. The liquid five-year fell 1 basis point to 5.72%. ($1 = 85.9840 Indian rupees).
Time of India
18-07-2025
- Business
- Time of India
India bonds flat, traders eye debt supply for cues
Indian government bonds remained steady, holding a key level ahead of New Delhi's debt sale and the RBI's cash withdrawal operation. Sentiment was aided by expectations of strong demand in the auction and a fall in U.S. yields. The focus is on the demand for the shorter-end bonds and potential liquidity tightening due to GST and the RBI's VRRR auction. Tired of too many ads? Remove Ads Bond yields move inversely to prices. Tired of too many ads? Remove Ads RATES Indian government bonds were steady in early deals on Friday, clinging to a key level ahead of New Delhi's debt sale and the central bank's cash withdrawal yield on the benchmark 10-year bond was at 6.2993% as of 10:00 a.m. IST, compared with the previous close of 6.3010%."We are expecting a strong demand in the auction, which is aiding sentiment. If the auction goes well, we can see a further rally in bonds," a trader at a primary dealership said."U.S. yields have come down, and there has been some buying from foreign banks, which is supporting the market."The yield on the U.S. 10-year bond fell 3 basis points to 4.4354% in Asian hours, compared with Thursday's close of 4.4630%.New Delhi will sell bonds worth 270 billion rupees ($3.14 billion), which includes a new five-year paper and a 30-year bond Focus will be on the demand for the shorter-end, which will reflect in the cut-off price of the new five-year, traders also expect some liquidity tightening due to cash outflows related to GST and the Reserve Bank of India 's variable rate reverse repo (VRRR).The RBI will conduct a seven-day VRRR auction worth 2 trillion rupees on may push the weighted average interbank call money rate to around 5.50%, closer to the repo rate as intended by the central daily average liquidity surplus in the banking system dropped close to 2.9 trillion rupees this week, versus 3.5 trillion rupees last week, RBI data shorter-duration overnight index swap rates (OIS) were not traded yet, while the 5-year rate inched lower, tracking a decline in U.S. Treasury yields The one-year OIS rate was at 5.51% and the two-year OIS rate was at 5.48%. The liquid five-year fell 1 basis point to 5.72%. ($1 = 85.9840 Indian rupees).
