Already hit banking industry is making the money markets gain for the third-straight week on liquidity replenishment by more debt purchases. This has come in view of the continuing depreciating rupee which hit a new low of over 74 and few of the analysts view it touch levels of 76 by the 2018 year-end.
Nonetheless, few of the factors have turned in favour of the rupee for now such as the cooling off seen in the price of crude oil price as the Saudi Arabia promised to increase its oil production. Also, equity market sell-off across the world has come as a positive for the crude price which has receded from its record high.
In a note as per a leading business daily report, Indranil Sen Gupta and Aastha Gudwani, economists at Bank of America Merrill Lynch said, "We reiterate our standing call that the RBI will issue an OMO calendar to cool yields, stabilize markets and arrest lending rate hikes," Indranil Sen Gupta and Aastha Gudwani, economists at Bank of America Merrill Lynch.
Banking system is seeing liquidity tightening in the wake of ongoing festive season and the currency intervention by the RBI is increasing further liquidity deficit.
For the October month, bond purchases have been pegged at Rs. 36,000 crore which has been to a wide extent offset by forex sale until mid-October.
And in the week, bond yield have declined by 5 basis points and is last seen trading at 7.87%.
Rupee on the other hand is again losing steam and was trading in the red with loses to the extent of 0.078% at 73.33 per US dollar.