In reverse repo deal, RBI signals intent to lift short-term rates
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The cut-off yield, above which banks cannot claim a rate for parking excess cash, was at 3.55 percent. That was higher than the average market expectations, dealers said.
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MUMBAI: The Reserve Bank of India (RBI) Friday signalled its intent to haul slumping overnight rates closer to the relevant benchmark when it accepted Rs. 2 lakh crore in reverse repo bids at 11 basis points higher than the reference gauge.
The cut-off yield, above which banks cannot claim a rate for parking excess cash, was at 3.55 percent. That was higher than the average market expectations, dealers said.
Banks parked Rs 2 trillion excess cash amid RBI signalling
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Synopsis
The cut-off yield, above which banks cannot claim a rate for parking excess cash, was at 3.55 percent. That was higher than the average market expectations, dealers said.
Getty Images
MUMBAI: The Reserve Bank of India (RBI) Friday signalled its intent to haul slumping overnight rates closer to the relevant benchmark when it accepted Rs. 2 lakh crore in reverse repo bids at 11 basis points higher than the reference gauge.
The cut-off yield, above which banks cannot claim a rate for parking excess cash, was at 3.55 percent. That was higher than the average market expectations, dealers said.
By Subhadip Sircar
India’s sovereign bond investors are converging on a trade idea for 2021. They’re betting that short-term yields would rebound as the central bank soaks up excess cash on signs of an economic recovery.
RBL Bank Ltd. and Quantum Asset Management Ltd. are among those forecasting that liquidity tightening by the Reserve Bank of India will lead short-end rates to rise faster than the long-end bear-flattening the yield curve.
“Short-end rates, of up to three years maturity, are currently priced aggressively due to excess liquidity and thus carry maximum risk of a reversal,” said Pankaj Pathak, fixed-income fund manager at Quantum Asset Management Ltd. in Mumbai. “The longer segment may continue to get RBI’s support from open market operation purchases and operation twists.”
Traders see cash tightening in India to drive bond playbook
Photo: Bloomberg
Subhadip Sircar
, Bloomberg
India’s sovereign bond investors are converging on a trade idea for 2021. They’re betting that short-term yields would rebound as the central bank soaks up excess cash on signs of an economic recovery
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India’s sovereign bond investors are converging on a trade idea for 2021. They’re betting that short-term yields would rebound as the central bank soaks up excess cash on signs of an economic recovery.
RBL Bank Ltd. and Quantum Asset Management Ltd. are among those forecasting that liquidity tightening by the Reserve Bank of India will lead short-end rates to rise faster than the long-end bear-flattening the yield curve.