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RBI injects over Rs 1.5 lakh crore via VRR auctions, buybacks
ET BureauLast Updated: Jan 24, 2025, 05:39:00 AM IST
Synopsis
On Thursday, RBI injected more than ₹1.45 lakh crore via two overnight variable rate repo (VRR) auctions and a buyback operation of ₹9,666 crore. The RBI will conduct a similar VRR auction on Friday for ₹2 lakh crore, along with a 14- day auction for ₹1.75 lakh crore, maturing on February 7.
Agencies This auction received bids worth ₹23,279 crore.Mumbai: The Reserve Bank of India (RBI) Thursday conducted two overnight variable rate repo (VRR) auction in addition to a pre-announced buyback as liquidity deficit persisted in the banking system.
On Thursday, RBI injected more than ₹1.45 lakh crore via two overnight variable rate repo (VRR) auctions and a buyback operation of ₹9,666 crore. The RBI will conduct a similar VRR auction on Friday for ₹2 lakh crore, along with a 14- day auction for ₹1.75 lakh crore, maturing on February 7.
The two VRR auctions for ₹1.25 lakh crore and ₹50,000 crore each on Thursday were conducted as system liquidity saw a large deficit of ₹2.87 lakh crore on Wednesday, likely pressured by monthly GST outflows. Daily average deficit in January stood at ₹1.75 lakh crore.
The first auction which had a notified amount of ₹1.25 lakh crore saw bids worth ₹1.69 lakh crore, while the second auction for ₹50,000 crore saw bids worth ₹20,668 crore, showing that demand for funds from the first auction was satisfied by the second auction, treasury executives said. The cut off rate for both the VRR auction was 6.51%.
"From these two auctions, the intent of the RBI is very clear - they are trying to keep overnight rates closer to the repo rate. From the first auction, we saw that there was more demand and in the second auction, the demand was met," said Gaura Sen Gupta, chief economist, IDFC First Bank.
In the buyback operation, the RBI, on behalf of the Centre, bought ₹9,666 crore worth of securities on Thursday, almost 50% of the notified amount of ₹20,000 crore. This auction received bids worth ₹23,279 crore.
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