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India's ultra-short-term rates dropped further below the benchmark interest rate on Wednesday as the Reserve Bank of India easing its monetary policy stance boosted bets of imminent rate cuts and comfortable liquidity conditions added to demand. The RBI sold 91-day Treasury bills at a cutoff yield of 6.43%, seven basis points (bps) lower than the central bank's repo rate of 6.
50%. BY THE NUMBERS The inversion between the repo rate, an overnight rate, and the 91-day government treasury bill yield is at its widest since April 6, 2022. On the other hand, the RBI sold 182-day and 364-day notes at 6.
54% and 6.53%, bringing the spread with the policy rate to the narrowest in nearly three years. Finance Corporate Fraud and Forensic Modelling By - Ankush Lamba, Managing Director- Ankura View Program Legal Mastering M&A Deal Making By - Ashwath Rau, Senior Partner- AZB & Partners View Program Artificial Intelligence(AI) AI and Analytics based Business Strategy By - Tanusree De, Managing Director- Accenture Technology Lead, Trustworthy AI Center of Excellence: ATCI View Program Office Productivity Advanced Excel Course - Financial Calculations & Excel Made Easy By - Anirudh Saraf, Founder- Saraf A & Associates, Chartered Accountant View Program Artificial Intelligence(AI) Basics of Generative AI : Unveiling Tomorrow's Innovations By - Metla Sudha Sekhar, Developer and Lead Instructor View Program Strategy ESG and Business Sustainability Strategy By - Vipul Arora, Partner, ESG & Climate Solutions at Sattva Consulting Author I Speaker I Thought Leader View Program Finance A2Z Of Money By - elearnmarkets, Financial Education by StockEdge View Program Artificial Intelligence(AI) Java Programming with ChatGPT: Learn using Generative AI By - Metla Sudha Sekhar, Developer and Lead Instructor View Program Marketing Digital Marketing Masterclass by Pam Moore By - Pam Moore, Digital Transformation and Social Media Expert View Program Artificial Intelligence(AI) Generative AI for Dynamic Java Web Applications with ChatGPT By - Metla Sudha Sekhar, Developer and Lead Instructor View Program Office Productivity Mastering Microsoft Office: Word, Excel, PowerPoint, and 365 By - Metla Sudha Sekhar, Developer and Lead Instructor View Program Legal Digital Personal Data Protection Act 2023 By - Gaurav Khera, Partner, Risk Advisory: Deloitte View Program Finance Financial Reporting and Analytics By - Dr.
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In the past, the RBI has shown its discomfort with short-term rates remaining below the policy rate and has acted to align them accordingly. While the central bank changed its policy stance to "neutral", it did not give a clear indication of the timing of rate cuts. CONTEXT The central bank has sold bonds worth over 240 billion rupees ($2.
86 billion) from July to September. It typically buys or sells bonds to align banking system liquidity and rates with monetary policy. The daily average banking system liquidity surplus was above 1 trillion rupees in July-September and has jumped to 2 trillion rupees this month.
Traders said the RBI may not take any stringent steps to curb liquidity but could restart bond sales after taking a break in the last week of September. KEY QUOTE "We have had two cutoffs (on 91-day treasury bills) that have been below the repo rate and yields should remain around these levels as comfort on liquidity is giving confidence to markets that a rate cut will follow soon," said VRC Reddy, treasury head at Karur Vysya Bank. (You can now subscribe to our Economic Times WhatsApp channel ).
