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A glut of cash chasing assets in India causes short-term rates to plunge

Banks have parked 6.1 trillion rupees ($82.5 billion) of excess cash with the central bank at the reverse repo rate of 3.35%

Governor Shaktikanta Das has pledged to stay accommodative well into 2021 as he tries to dig the economy out of an unprecedented technical recession
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Governor Shaktikanta Das has pledged to stay accommodative well into 2021 as he tries to dig the economy out of an unprecedented technical recession

Subhadip Sircar | Bloomberg
A glut of cash chasing assets in India has caused short-term rates to plunge.

A three-month treasury bill was sold at a record low yield Wednesday, while the market repo clocked a trade at 0.01%. Key borrowing costs like the weighted interbank call rate and collateralized money-market rates are way below the Reserve Bank of India’s benchmark in recent days, indicating investors such as mutual funds are accepting returns lower than what RBI’s deposit window would offer banks.

 


Governor Shaktikanta Das has pledged to stay

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First Published: Nov 26 2020 | 8:35 AM IST

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