Indian Overnight cash moved On Surplus Cash

Indian overnight cash rate continued to stay tagged to the central bank's main borrowing rate of 3.25 percent on Thursday as abundant cash in the system helped banks meet their reserve needs comfortably. At 12:45 p.m., the one-day money INROND= was trading at 3.20/30 percent, unmoved from its previous close. Banks have to report their liabilities to the central bank once in two weeks and park 5 percent of their deposits with it as cash for the two weeks that follow. The cash rate is hovering around the central bank's reverse repo rate as lenders in the inter-bank market can also deploy their excess funds with the Reserve Bank of India (RBI) via its daily liquidity adjustment auctions at that rate. Demand for funds used to be higher in the first week of a reporting cycle, but since early April that demand has been too little to pressurise the overnight money rates, as cash surplus in the system soared above 1 trillion rupees by then.

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