Surplus liquidity pushes WACR to 6.16%, 9 bps lower than repo rate

The weighted average call rate (WACR), which indicates banks’ overnight cost of borrowing, closed at 6.16% on Monday, nine basis points below the repo rate of 6.25%, due to surplus liquidity conditions in the banking system. Call rate was at 5.77% the previous day, and was slightly lower than usual as it was a reporting Friday, treasury executives said.

The WACR eases when liquidity conditions in the banking system is in a surplus mode. System liquidity stood at a surplus of Rs 1.6 lakh crore on April 6, latest RBI data showed, and was in a comfortable surplus on April 7 as well, traders said.

Yields of the 10 year benchmark government security closed at 6.48%, up 2 basis points from its previous close, pressured by a sell off in Indian stocks and bonds, traders said.

Traders are now looking at the Reserve Banks’ monetary policy decision expected on Wednesday to gauge further cues on interest rate trajectory. The RBI is expected to cut rates by 25 basis points to 6%, while being mildly dovish and cautioning on the uncertain global environment according to economists, according to an ET poll. Institutions are also split down the middle on if the RBI will change its stance to ‘accommodative’, from neutral.