Banks place ₹79,655 crore in RBI's 29-day reverse repo as yields rise
Banks bid ₹79,655 crore in the Reserve Bank of India's 29-day variable-rate reverse repo auction, while the 10-year benchmark yield edged up to 7.29%.
In the latest 29-day variable-rate reverse repo auction, banks submitted a bid of ₹79,655 crore, which the Reserve Bank of India accepted at a 5.49% cut-off rate, against a ₹2 trillion ceiling. Market participants expect the central bank to follow the upcoming government bond auction with open-market operation sales, as other liquidity-absorption tools are limited. Dealers noted that banks are less interested in short-term VRRR placements because the funds return after the tenor, preferring the longer-duration OMO sales.
The weighted average call rate slipped to 5.30% from 5.36%, while RBI data showed a ₹4.23 trillion surplus in system liquidity. The 10-year benchmark yield climbed to 7.29%, its highest since early December 2023, amid speculation of a December rate hike and ongoing liquidity-withdrawal measures. The RBI plans another 10-day VRRR auction of ₹1.5 trillion the following day.
Why it matters
The auction shows banks' liquidity preferences and signals upcoming RBI actions that could affect market rates.
How this story developed
- Sep 22 How first-time buyers can protect mortgage rates before an offer is accepted
- Oct 6 Nationwide launched a reservation product that can lock a quoted mortgage rate for up to 90 days after a decision in principle.
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