Weekly Macro Data Coverage - November 19, 2018

Key Takeaways:

  • Repo WACR differential continues to stands at 7 bps in last two weeks
  • Cumulative credit offtake has been expanding at 9.8% when deposit is growing at 3.7% in FY19.
  • With the decline in commodity prices in the global market, the Indian rupee is gaining momentum against USD.
  • Net capital outflows from the United States have turned to positive for first time in September, 2018 over last six months.


Liquidity:
The repo WACR differential continues to stands at 7 bps in last two weeks. Capital infusion worth of Rs. 100 billion through OMO operation has marginally eased the liquidity pressure in the banking system. However, strong growth in credit offtake and higher credit deposit ratio indicates demand side is very firm.  Acceleration in core inflation for past three months also gives a sense of strong consumer demand.


Capital Market:
Indian 10 year G-Sec bond yield remain stable at 7.8%. In the US, deceleration in consumer inflation and stability in labor market results the bond yield to subside. Therefore, spread between India and US 10 year G-Sec bond has increased to 473 bps. The spread was 464 bps two weeks earlier. Moreover, fall in commodity prices also hints an improvement in the financial market.


Currency Trend:
Indian rupee is continuously appreciating against the US dollar for past five weeks. The currency pair had reached all-time high of 74.07 in second week of October, 2018. The Indian rupee is strengthening due to improvement in capital inflows along with a fall in oil price. This will give leverage to the RBI in managing liquidity condition, which has emerged as a major challenge for the central bank. In a positive development, net capital outflows from the United States have turned positive for first time in September, 2018 in a six month time frame. This gives a sense of improvement in value of domestic currency and overall domestic liquidity condition in the emerging markets.


Interest rates and ratio

Interest Rate

 Nov.10, 2017

 Oct. 12, 2018

 Oct. 19, 2018

 Oct. 26, 2018

 Nov.02, 2018

 Nov.10, 2018
Policy Repo Rate 6.00 6.50 6.50 6.50 6.50 6.50
Call Money Rate (WA) 5.88 6.41 6.53 6.50 6.43 6.43
364-Day Treasury Bill Yield 6.25 7.58 7.50 7.47 7.48 7.42
2-Yr Indian G-Sec 6.51 7.65 7.58 7.44 7.43 7.42
10-Yr Indian G-Sec 7.12 7.96 7.88 7.84 7.84 7.81
10-Yr US G-Sec 2.40 3.19 3.07 3.20 3.18 3.08
10Yr Indian bond Spread 472 477 481 464 466 473
AAA Indian Corporate 7.62 8.31 8.63 8.89 8.70 8.67
AA Indian Corporate 7.97 9.49 8.97 8.97 - -
AAA to10 YR Indian bond spread 50 35 75 105 86 86
Credit/Deposit Ratio 73.10 - 76.75- - 76.75 -
USD LIBOR 1.49 2.43 2.47 2.58 2.61 2.64

Source: RBI, Investing.com

 

  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%

Source: RBI


Bond Market:

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

 

Liquidity Operation by RBI:

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


Corporate Bond Position (in Rs. lakh cr):

Source: RBI, Acuité Research


USD-INR Movement (64.86 in Nov, 2017 to 71.9 in Nov, 2018):

Source: RBI, Acuité Research