India cenbank to infuse longer-term liquidity via 14-day variable repo
By Dharamraj Dhutia
MUMBAI, Feb 9 (Reuters) -The Indian central bank is infusing longer-termliquidity into the financial system, it said on Thursday.
The Reserve Bank of India will conduct a 14-day variable rate repo auction on Feb. 10, 2023 for an aggregate amount of 500 billion rupees ($6.06 billion), it said in a release.
Liquidity in the bankingsystem has been oscillating between a marginal deficit and a surplus over the last few days against the backdrop ofa strong pick-up in bank credit and accelerated government spending.
The liquidity deficitstood at 112 billion rupees on Wednesday, down from a surplus of over 650 billion rupees at the start of the week.
The need for banks to maintain reserve requirements before Friday and for businesses to pay up excise taxes led to heavy borrowing from the overnight inter-bank market and pushed up call money rates to as high as 6.75%, above the policy repo rate of 6.5%.
While infusing liquidity, the RBI will skip a weekly variable rate reverse repo auction, designed to absorb liquidity this week, it said.
($1 = 82.5370 Indian rupees)
Reporting by Dharamraj Dhutia; Editing by Nivedita Bhattacharjee and Saumyadeb Chakrabarty
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