Monday July 21, 05:54 PM
Cash rates near 6-mth high on CRR hike effect |
|
MUMBAI (Reuters) - Indian overnight cash rates ended close to six-month highs on Monday after the increase in banks' cash reserve ratio took effect over the weekend draining cash from the system.
Call rates ended at 9.40/9.50 percent, slightly lower than Saturday's close of 9.50/9.75, which was its highest since January 18.
"The liquidity in the system is tight after the increase in banks' cash reserve ratio on Saturday, and it would remain tight for this week," said G. Bhaskar, a dealer with Mumbai-based Andhra Bank.
The Reserve Bank of India had increased the banks' cash reserve requirement by 50 basis points last month, the first stage of 25-basis-point increase took effect on July 5, while the second leg took effect on Saturday.
Together, the two stages have drained about 180 billion rupees from the banking system.
The weighted average rate in the call money market was 9.53 percent, while collateralised borrowing and lending obligation (CBLO), a secured form of money market lending, was 8.37 percent, according to the Clearing Corp of India (CCIL).
Volume in the call money market was 148.81 billion rupees and in CBLO it was 218.78 billion rupees, CCIL data showed.
The central bank did not receive any bids at its daily reverse repo auction while it pumped in 523.15 billion into the system, indicating the extent of cash crunch in the system.
|
