HomeDigital Marketingweighted average call rate: WACR rises to 6.71% as liquidity tightens ahead of RBI meeting

weighted average call rate: WACR rises to 6.71% as liquidity tightens ahead of RBI meeting

September 26, 2024
The weighted average call rate, which indicates banks’ overnight cost of borrowing, closed at 6.71% on Thursday, 21 basis point higher than the Reserve Bank of India’s current repo rate of 6.50%, due to deficit liquidity conditions in the banking system, money market dealers said.

The WACR, which is the operating target of the RBI’s monetary policy, was at 6.69% the previous day, and has consistently risen in the past week due to tight liquidity conditions.

The banking system liquidity, as measured by net injection of funds by the RBI, stood at a deficit of Rs. 26,382.29 crore, as of September 24, central bank data showed.

“Nationalised banks, who are typically lenders, are going through a deficit. So there is no lending happening, which is why the WACR is so high”, said a dealer with a state run bank.

Yields on the 10-year benchmark government security fell to a fresh 32 month low at 6.73%, as against its previous close of 6.76%


“This is because the market is expecting a dovish policy next month, even though there won’t be a change in stance. We also have the borrowing calendar coming in tomorrow where there might be some short term borrowing”, said a bond trader at a stand alone primary dealership. The RBI’s monetary policy committee will meet on October 9 to make a decision on rate cuts.

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