Interbank Call Rates Hit 5.00% Amidst Tight Liquidity
By ThePip Desk
India’s interbank call rates surged to 5.00% due to strong borrowing demand and tight liquidity, with the weighted average rate at 5.16%. Explore the market dynamics.
India’s interbank call rates saw an increase on Wednesday, reaching 5.00%. This marks a rise from Tuesday’s 4.90%, driven by robust demand from borrowing banks and prevailing tight liquidity within the banking system.
Wednesday’s Key Rate Movements
- Interbank call rate (Wednesday): 5.00%
- Interbank call rate (Tuesday): 4.90%
- Call money market Weighted Average Rate (Wednesday): 5.16%
- Call money market Weighted Average Rate (Tuesday): 5.11%
- Overnight borrowing rates touched a high of 5.20% and a low of 4.60%.
The upward movement in rates reflects a strong demand from borrowing banks operating within the first week of the reporting cycle. This demand was met by an overall tight liquidity environment across the banking system, contributing to the higher borrowing costs.
Repo Market Activity Overview
- TREP market Weighted Average Rate (Wednesday): 4.97%
- TREP market total volume (so far): Rs 417538.55 crore
- Basket REPO market Weighted Average Rate (Wednesday): 5.08%
- Basket REPO market total volume (so far): Rs 99095.81 crore
The indicative call rates, which concluded Tuesday at 4.90%, were compiled from contributions made by various prominent financial institutions. These included major players such as Andhra Bank, AXIS Bank, Bank of America, Bank of Baroda, and ICICI Bank, among others involved in the interbank market.
Overall, Wednesday’s market activity highlighted heightened borrowing demand and tightened liquidity, reflected across interbank and repo segments.