Halister News

(Bloomberg) -- India’s looming festive season is likely to further strain liquidity in the banking system and may spur RBI to conduct its first OMO in over a month, Soumyajit Niyogi, associate director at India Ratings says.

• Higher currency in hands of public due to festive spending is adding to banking system cash strain which has already tightened due to non-resident deposit outflows
• Currency in circulation rose by 285.73b rupees for the week ending Oct. 7
  • Cumulative fiscal year-to-date increase stands at 929.9b rupees or 5.6% increase compared to 3.7% in the corresponding period last year
• NOTE: RBI last held an OMO on Sept. 8
• NOTE: Average system liquidity tightened to a deficit of 90.95b rupees for the week ending Oct. 15 compared to a surplus of 328.67b in prior week, according to Kotak Mahindra estimates
• Yield on 6.97% 2026 bond down 1 bp to 6.73%