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The weighted average call rate (WACR), unsurprisingly, fell 44 basis points below the repo rate to 4.81%, easing rates in the ultra-short tenor category, as liquidity surplus widened the most since February 2022. This liquidity surplus is expected to moderate by the third quarter of FY27 as seasonal factors drain funds from the banking system. For now, the central bank is managing the excess liquidity through temporary variable rate reverse repo (VRRR) operations, largely of shorter tenures. "I expect system liquidity to moderate from 3QFY27 amid festive-season currency leakage, a higher current account deficit, softer government spending, and subdued capital inflows," said Soumyajit Niyogi, director at India Ratings. Read more: 'Revolver' misfire hits credit card issuers: India's credit card boom sees lower bank profits Niyogi does not rule out the possibility of open market operations (OMOs) in Q4 when liquidity is expected to moderate or even be at a deficit. "Structural liquidity leakages and maturing FX forward positions could gradually erode surplus liquidity, potentially reopening the case for OMO support from 4QFY27 if capital inflows remain weak," he said. "This would make external sector dynamics the key determinant of liquidity conditions in 2HFY27." On Wednesday, the RBI conducted an overnight VRRR operation of ₹5 lakh crore, which got bids for ₹4.6 lakh crore. Tuesday's VRRR auction of 7 days garnered ₹1.17 lakh crore against a notified amount of ₹6 lakh crore. The central bank will conduct another overnight VRRR for ₹6 lakh crore on Thursday Liquidity is expected to increase further, as banks swap the remaining FCNR(B) deposits that they have received over the next few days. (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price
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