The WACR, which is the operating target of the RBI’s monetary policy, was 6.69% the previous day, and has risen steadily over the past week due to tight liquidity conditions.
The liquidity of the banking system as measured by the net injection of funds by the RBI was at a deficit of Rs. 26,382.29 crore, as on September 24, central bank data showed.
“Nationalized banks, which are usually lenders, are going through a deficit. So there is no lending, that’s why the WACR is so high”, said a dealer at a state-run bank.
The yield on the benchmark 10-year government security fell to a 32-month low of 6.73%, against its previous close of 6.76%.
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“This is because the market expects a dovish policy next month, even though there will be no change in the trend. We also have a borrowing calendar coming up tomorrow where there may be some short-term borrowing”, said a bond trader at a stand-alone primary dealership.
RBI’s Monetary Policy Committee will meet on October 9 to decide on the rate cut.
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