increases 14-day VRRR amount in December to shift out of overnightauctions
·RBI’s rebalancing of liquidity management
started in february 2020, because the central bank shifted its liquidity
absorption tool out of the fixed-rate nightlong reverse repo window into VRRR
auctions of longer maturity.
·In order to absorb extra liquidity within
the system, the Reserve Bank of India declared conducting a VRRR program
because its higher yield prospects as compared to the fixed rate nightlong
·The reserve bank of india (RBI) has
enhanced the quantity of variable rate reverse repo (VRRR) auctions in Dec,
because it is shifting out of the fixed-rate nightlong reverse repo auction and
re-establishing VRRR being as main liquidity management operations
·The amount below the 14-day VRRR auctions
on a fortnightly basis has been increased to Rs 6.5 lakh crore for Dec
seventeen and additional to Rs 7.5 lakh crore for Dec thirty first.
·While from Jan 2022 forwards, liquidity
absorption are undertaken in the main through the auction route.
·Market participants expect the heavy liquidity
withdrawal from the system can pull overnight balance rates near by repo rate,
this might mean that accrual returns on a really short-run, low market risk
product like nightlong and liquid funds may rise within the near months.