Overview

• On July 9 the RBI offered a two-day VRRR operation worth ₹1 trillion in its second reverse repo auction of the week.
• The July 4 seven-day ₹1 trillion reverse repo drew ₹1.7 trillion in bids with ₹1 trillion accepted at a 5.47% cut-off.
• A surplus of about ₹3.4 trillion stems from elevated government spending, lower-than-expected GST inflows and a 100-basis-point CRR reduction.
• Excess cash has kept the weighted average call rate near the 5.25% standing deposit rate and below the 5.50% repo rate.
• RBI officials intend to continue short-tenure absorption tools until surplus funds drop below 1% of net demand and time liabilities.