Short-Term Rates Crash in India With Funds Overflowing With Cash
- Treasury bill was auctioned at record low yield on Wednesday
- Calls increase for central bank to suck out liquidity
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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.