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Money > Business Headlines > Report April 5, 2002 | 1440 IST |
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RBI mops up Rs 300 billion through repo auctionBS Banking Bureau The Reserve Bank of India on Thursday mopped up Rs 300.55 billion from the money market through a one-day repo auction. This is the highest ever amount mopped up in a repo auction since the apex bank started the liquidity adjustment facility on June 5, 2000. Thursdays' outflow is more than six times higher than the average daily repo outflow of around Rs 50 billion. The earlier highest mop-up through the repo auction was on September 5, 2000, when the RBI sucked out Rs 191.15 billion. Money market dealers said that the immediate reason for the huge repo outflow was the hefty build up of cash reserve ratio products by banks in the first week of the current reporting fortnight. This has led to a lower demand for funds and softer rate in the call money rates. Overnight rates, as a matter of fact, dipped to 5.80 per cent on Thursday. This prompted banks to put surplus money in the repo auction where they get a better return at 6 per cent. Meanwhile, the RBI today set the cut-off yield on the Rs 40 billion 10-year paper at 6.85 per cent. The cut-off for the Rs 30 billion, seven-year paper was set at 6.65 per cent. Money dealers said that the low cut-off yields on both papers were reflective of the huge liquidity overhang in the system. Sudhir Joshi, treasurer, HDFC Bank said: "The huge covering of the CRR requirement in the very first week was partly responsible for the huge liquidity overhang on the eve of closing of the reporting fortnight." He added that the large dollar mop-up by the central bank in recent times had released a lot of rupee resources into the system. ALSO READ:
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