MUMBAI, Aug 10 (Reuters) - Indian money market participants expect Reserve Bank of India's variable rate reverse repo (VRRR) to be sharply undersubscribed as liquidity surplus dips. ** RBI conducting 27-day variable rate reverse repo auction for up to 500 billion rupees ($6.29 billion) on Wednesday, against maturing amount of 308.84 billion rupees.
** Market participants expects the cutoff yield to be at 5.39%, while repo rate stands at 5.40%. ** "Apart from some large state-run banks, there is no appetite from other lenders to participate in today's reverse repo as liquidity situation has turned a bit volatile," a trader with a private bank said. ** Banking system liquidity surplus eases below 1 trillion rupees, as most banks had maintained additional reserves to cover for Tuesday's holiday, traders said. ** India's one-day interbank call money rate was at 5.25%, while overnight TREPS rate was at 5.13%. ** Kotak Mahindra Bank expects banking system liquidity surplus to be around 1.70 trillion rupees by end of this week.
($1 = 79.4550 Indian rupees) (Reporting by Dharamraj Lalit Dhutia; Editing by Rashmi Aich)
