Weekly Macro Data Coverage - November 12, 2018

Key Takeaways:

  • With the infusion of Rs. 100 billion through OMO operation, Systemic Liquidity has marginally improved in second week of November.
  • The Repo-WACR differential has dropped to 7 bps.
  • Credit Deposit ratio has further increased to 76.75 in last week of October, 2018.
  • With falling commodity prices in the global market, the Indian rupee is gaining momentum against USD.

There is a sign of improvement in liquidity condition in the banking sector. With Rs. 100 billion infusion through OMO operation, the WACR stands 7 bps lower that repo rate in first week of November. It is noted that the differential was in parity in last week of October. Moreover, stability in the forex market has also further improved the domestic liquidity condition. However, further increase in Credit Deposit ratio indicates the liquidity condition is likely to remain tight in the coming weeks.

Capital Market:
Indian 10-year G-Sec bond yield has declined to three month low in second week of November, 2018. A de-trend in oil price and USD-INR currency pair gives a positive sentiment to the markets. Rising oil price was a concern of inflation as well as fiscal deficit. Therefore, G-Sec bond yield has been responding positively to the fall in oil price. In the US bond market, with the unchanged in US fed rate, normalization is expected in the US bond yield, which is almost at seven year high.

Currency Trend:
With a positive trend in capital inflows and fall in commodity prices, Indian rupee is appreciating against the US dollar. As market forces are appreciating Indian rupee, RBI has given pause to the selling of its forex reserve. The central bank had sold its forex reserve of around $8 billion in one month in October to control the currency volatility. We expect the USD INR currency pair to remain in upward trend in November, 2018.

Interest Rate & Ratio:

Nov.03, 2017

Oct. 05, 2018 Oct. 12, 2018 Oct. 19, 2018 Oct. 26, 2018 Nov.02, 2018
Policy Repo Rate 6.00 6.50 6.50 6.50 6.50 6.50
Call Money Rate (WA) 5.86 6.34 6.41 6.53 6.50 6.43
364-Day Treasury Bill Yield 6.25 7.77 7.58 7.50 7.47 7.48
2-Yr Indian G-Sec 6.47 7.79 7.65 7.58 7.44 7.43
10-Yr Indian G-Sec 7.12 8.02 7.96 7.88 7.84 7.84
10-Yr US G-Sec 2.33 3.15 3.19 3.07 3.20 3.18
10Yr Indian Spread (bps) 479 487 477 481 464 466
AAA Indian Corporate 7.63 9.00 8.31 8.63 8.89 8.70
AA Indian Corporate 7.97 9.74 9.49 8.97 8.97 -
AAA to10 YR Indian bond spread(bps) 51 98 35 75 105 86
Credit/Deposit Ratio 72.92 - 76.30 - 76.75 -
USD LIBOR 2.51 2.40 2.43 2.47 2.58 2.61

Source: RBI, Investing.com

Money Market:

  Deposit (In Rs. Lakh cr) Bank Credit (In Rs. Lakh cr)
As on Oct 26, 2018 117.71 90.33
As on May 25, 2018 113.52 82.23
As on Oct 27, 2017 107.97 62.23
YTD (% change) 3.69% 9.85%
YoY (% change) 9.02% 45.16%


Commercial Paper (Fortnight): Outstanding  (In Rs. Lakh cr) Amount issued (In Rs. Lakh cr)
31-Oct-18 5.88 0.95
30-Sep-18 5.56 0.79
31-Oct-17 3.96 0.53
% Change (MoM) 5.76% 20.25%
% Change (YoY) 48.48% 79.25%

Source: RBI

Bond Market:

Corporate Bond Position (in Rs. lakh cr):

Source: RBI, Acuité Research

Liquidity Operation by RBI:

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

USD-INR Movement:

Source: RBI, Acuité Research

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