Overnight money market rates ease 0.6% in 2 weeks on improved liquidity

Mumbai: Rates in the overnight money market instruments have eased by around 0.6 per cent over the past two weeks after liquidity conditions in the banking system improved.

Data compiled from the RBI showed that overnight money market rates stood at 4.73 per cent as of April 10, down from 5.34 per cent on April 2.

Within the overnight segment, call money and Triparty Repo Dealing and Settlement (TREPS) rates softened by 0.03-0.05 per cent during the period, reflecting improved liquidity conditions in the system.

The liquidity in the banking system turned into a sizeable surplus primarily due to the maturity of government securities (G-Secs). G-Secs worth Rs 31,329 crore and Rs 86,403 crore matured on April 8 and April 12, respectively, with further maturities of Rs 34,791 crore scheduled for April 17.

As a result, system liquidity is estimated to have remained in surplus of around Rs 5.55 lakh crore as on April 10, according to RBI data.

“Going ahead, we will continue to be proactive and pre-emptive in liquidity management and ensure sufficient liquidity in the banking system to meet the productive requirements of the economy,” RBI Governor Sanjay Malhotra said during the April monetary policy announcement.

To absorb excess liquidity, the central bank conducted Rs 2 lakh crore variable rate reverse repo (VRRR) auctions on

April 10.