Reserve Bank to conduct 14-day VRRR auction worth Rs 2 trillion today

The Reserve Bank of India will conduct a 14-day variable rate reverse repo auction worth 2 trillion rupees ($24.46 billion) on June 2, it said on Thursday.

The announcement was in line with market estimates, but the quantum is double than what most traders were expecting. The central bank had last conducted a reverse repo for a similar quantum on April 6.

The RBI infuses liquidity into the banking system using repos and sucks it out using reverse repos. A 14-day repo worth 468 billion rupees is due to mature on Friday.

India's banking system liquidity surplus has received a boost over the last few days and rose to 1.76 trillion rupees.

Earlier in the day, Reuters had reported that the central bank will likely shift to withdrawing liquidity from the banking system and opt for a variable rate reverse repo auction on Friday to balance recent surplus.