NPR  Aug 31  Comment 
The price of oil has dropped to its lowest point in years in recent weeks. That's meant layoffs and people falling behind on payments for the fancy vehicles they bought during the good times.
The Economic Times  Aug 28  Comment 
Arundhati Bhattacharya said RBI is likely to keep repo rate unchanged in the September monetary policy review due to the uncertainty in the markets and a volatile rupee.
The Hindu Business Line  Aug 27  Comment 
Uncertain monsoon still a risk to growth
The Economic Times  Aug 4  Comment 
With the repo rate lower, the credit spread seems to have actually gone up. So, basically these are distortions in the markets that we are seeing.
The Economic Times  Aug 4  Comment 
"However, if not today, then chances are we should see a rate cut of 25 bps at the next policy meeting sometime in September or even before that."
The Economic Times  Aug 4  Comment 
"Given that policy action was front-loaded in June, it is prudent to keep the policy rate unchanged at the current juncture," RBI said.
The Hindu Business Line  Aug 3  Comment 
Experts widely expect the central bank to maintain status quo on repo rate today
The Hindu Business Line  Aug 3  Comment 
With reference to the news that the RBI may hold repo rate cuts till September -- while the RBI advocates benign austerity, the government guns for growth through reduction of key rates. A...
The Hindu Business Line  Aug 3  Comment 
Research firm Moody’s Analytics today said that the Reserve Bank is likely to cut the benchmark rate by 0.25 per cent in its monetary policy review tomorrow as inflation is likely to remain subdue...
The Hindu Business Line  Aug 2  Comment 
Will wait and watch for clarity to emerge on monsoon and retail price trends, say experts


Repurchase agreements, or repos, are transactions in which a borrower "sells" securities to a lender and agrees to purchase it back for at a specified price on a later date. Most repos are overnight transactions between financial institutions and are primarily used in money markets.

In effect, a repo is a secured loan since the lender gets a collateral for the cash being lent out -- the only difference is that the ownership of the collateral is transferred in the case of repos, whereas under a loan the borrower retains ownership of the collateral. The difference between the selling price and the repurchase price is the effective interest in these transaction.

Rates on repo are different from LIBOR rates, since repos are considered a secured loan whereas the LIBOR is used for unsecured interbank lending.

The US repo market is estimated to be around $4.5 trillion in 2008.[1]

Uses of Repo

Securities dealers are primary users of overnight repos. In order to meet liquidity requirements, they enter into these agreements with short-term investors such as money market funds or other investors who need certain securities for a short-term. Repos are used to finance long positions, borrow money to fund speculative investments, and cover short positions in securities. The Federal Reserve also uses repos for open-market operations where they add or decrease reserves to the banking system by trading in US Treasury securities.

Although repo transactions are backed by a collateral, i.e. the lender can sell the securities to redeem the cash, counter-party risks exists. Specifically, the other party may go bankrupt and not repurchase the securities.


  1. WSJ Online, retrieved October 31, 2008

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