Now Reading: Overnight money market volume drops to zero on weekend
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Overnight money market volume drops to zero on weekend
The overnight money market segment recorded zero volume on August 8 and 9, the RBI data shows. On August 7, the overnight segment (call money, triparty repo, market repo and corporate bond…
The Story in Brief
The overnight money market segment recorded zero volume on August 8 and 9, the RBI data shows. On August 7, the overnight segment (call money, triparty repo, market repo and corporate bond repo) had clocked Rs 6,13,168.96 crore at a weighted average rate of 4.97 per cent.
On the weekend days, no trades were executed in any overnight or term money market instrument. However, banks deposited Rs 2,26,203 crore with the RBI under the Standing Deposit Facility (SDF) on August 8, and another Rs 2,24,228 crore on August 9, indicating surplus liquidity parked with the central bank at 5 per cent.
The Indian Opinion
Some commentators might spin zero overnight volume as a sign of frozen credit markets, but the reality is simpler: August 8 and 9 are a Saturday and Sunday, so trading naturally halts. The real story is the Rs 2.24 lakh crore parked in the Standing Deposit Facility on Sunday. That is not panic, it is a system flush with liquidity. Banks are happy to earn 5 per cent from the RBI rather than chase risky borrowers. This caution might frustrate growth boosters, but it also keeps the system safe. The test will come on Monday: will overnight volumes return to normal? If not, then we have a question worth asking.
Sources (3): rbi.org.in, rbi.org.in (2), rbi.org.in (3)
This story was synthesised by AI from the 3 sources linked above.
Updated: this story now draws on 3 sources.
