Weekly Macro Data Coverage Nov 04, 2019

Key Highlights:

  • Spread between over-night call money rate and repo rate stands at 8 bps
  • RBI is absorbing Rs. 50,000 crores under variable rate reverse repo, the surplus liquidity to be drain further in coming weeks
  • Debt issuances during H2 will be 2.68 lakh crore as against Rs. 4.42 lakh crore during the first half of the current financial year
  • Forex reserve has also reached all time high of $442.58 billion
  • Fed is set to buy government securities in order to infuse liquidity in the system. This will further weaken the US dollar.

Liquidity

The spread between over-night call money rate and repo rate stands at 8 bps. The surplus liquidity in the banking sector continues to reduce for last three quarters. The amount stands at Rs. 1.03 lakh crore (weekly average) as on fourth week of October 2019. As RBI is absorbing Rs. 50,000 crores under variable rate reverse repo, the surplus liquidity is to be drained further in the coming weeks. Meanwhile, increasing capital inflows in recent weeks is further infusing liquidity during a time when offtake is weak. As far as daily average of systemic liquidity is concerned, as on November 1st 2019, the surplus liquidity in the system reached Rs. 2.82 lakh crore.

Capital Market

In the capital market, due to increases in foreign investors’ participation in the sovereign bond market, the 10-year Indian G-Sec yield has reduced by almost 30 bps over a month to 6.58% during 4th week of October 2019. As per calendar for issuance of government securities, debt issuances during H2 will be 2.68 lakh crore as against Rs. 4.42 lakh crore during the first half of the current financial year. It is understood that government had preponed the debt issuances to frontload the system. Consequently, the fiscal deficit has reached Rs. 6.5 lakh crore, which is 92% of the target for the overall financial year. Going ahead, sovereign yields are expected to soften due to lower issuances along with fall in 10-year US sovereign yield; differential pressures may therefore decline.

Currency Trend

With higher FII inflows the Indian rupee has been continuously strengthening against the US dollar. The USDINR currency pair has reached 13-week low of 70.85 during the last week of October 2019. The forex reserve has also reached all time high of $442.58 billion. As domestic currency is strengthening against the USD, forward premia has also been reducing substantially. Meanwhile, Fed is set to buy government securities in order to infuse liquidity in the system - an exercise that will further weaken the US dollar.

Interest rates and ratio:

Interest Rate

Oct 26

Sep 27

Oct 04

Oct 11

Oct 18

Oct 25

2018

2019

2019

2019

2019

2019

Policy Repo Rate

6.50

5.40

5.15

5.15

5.15

5.15

Call Money Rate (WA)

6.50

5.31

5.26

5.06

5.05

5.07

364-Day Treasury Bill Yield

7.47

5.60

5.53

5.41

5.37

5.32

2-Yr Indian G-Sec

 

5.78

5.75

5.67

5.64

 

10-Yr Indian G-Sec

7.84

6.85

6.47

6.54

6.57

6.58

10-Yr US G-Sec

3.18

1.53

1.73

1.75

1.80

1.80

AAA (Indian corporate)

8.98

7.84

7.54

7.72

7.61

7.97

Spread in bps (10Yr Indian- US)

784

532

474

479

477

478

Credit/Deposit Ratio

76.75

75.67

-

75.66

-

-

USD LIBOR (3 month)

2.1743

1.8299

1.8224

1.7926

1.8381

1.8028

Forward Premia of US$ 1-month

4.58

3.98

4.40

3.72

3.79

3.38

US$ 3-month

4.36

3.95

3.87

3.80

3.71

3.61

US$ 6-month

4.33

4.23

4.18

4.08

4.05

3.99
Source: RBI, Investing.com

Deposit (In Rs. Lakh cr)

Bank Credit (In Rs. Lakh cr)

As on Oct 11,2019

129.38

97.88

As on Sep 13,2019

127.23

97.12

As on Oct 12,2018

117.86

89.93

YTD (% change)

1.69%

0.79%

YoY (% change)

9.77%

8.84%
Source: RBI

Money Market Performance

Commercial Paper (Fortnight):

Outstanding (In Rs. Billion)

Amount issued (In Rs. Billion)

30-Jun-19

5,039.40

1076.9

15-Jun-19

5,561.80

1078.7

30-Jun-18

4,918.30

1267.3

% Change (MoM)

-9.39%

-0.17%

% Change (YoY)

2.46%

-15.02%
Source: RBI


Indices

 

26-Oct-18

04-Oct-19

11-Oct-19

18-Oct-19

25-Oct-19

NSE Index

10,030.00

11,174.75

11,305.05

11,661.85

11,583.90

NSE Index Return

-2.65

-2.93

1.17

3.16

-0.67

BSE Index

33,349.31

37,673.31

38,127.08

39,298.38

39,058.06

BSE Index Return

-2.82

-2.96

1.20

3.07

-0.61



Liquidity Operation by RBI:


Source: RBI, Acuité Research;

Note: Net injection (+) and Net absorption (-)

Source: RBI




Policy Corridor and WACR






Corporate debt (in Rs. Lakh Cr):






Net Debt Issuance by Centre and State Government (Rs. Billion):


 

Source: Acuité Research, RBI




Commodity Price Index (3 Month Moving Average):






Commodity Price Movement (3 Month Moving Average):






USD-INR Movement:


Source: RBI, Acuité Research

 

Birabrata Panda

Sr. Statistician/Economist