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INDIA: Central Bank to inject Liquidity Friday

INDIA
IndiaEM BulletBulletAPACEmerging Market News
  • Despite not cutting the RBI Cash Reserve Ratio, the Central Bank’s focus is likely to remain on interbank liquidity following the Central Bank’s intervention in the currency markets on Monday and Tuesday this week.
  • The RBI will inject liquidity through its Variable Rate Repo (VRR) auction on February 14 and it is intended to be one of the largest liquidity injections under the relatively new program.
  • The decline in interbank liquidity is a direct result from RBI currency intervention and in his post monetary policy meeting statement the RBI Governor indicated that additional measures will be provided, whilst re-iterating that the intention was to keep the currency stable and avoid volatile shifts, albeit not targeting any specific levels.
  • RBI Governor Malhotra also announced that the upcoming implementation of the new Liquidity Coverage Ratio will be deferred to 2026.
  • The large banks had been vocal in their opposition to the LCR implementation citing potential negative impacts on an already strained environment for liquidity.
  • The Financial Benchmarks India Overnight Mumbai Interbank Outright Rate was steady yesterday at 6.40% off from the highs of 7.08% in January.  
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  • Despite not cutting the RBI Cash Reserve Ratio, the Central Bank’s focus is likely to remain on interbank liquidity following the Central Bank’s intervention in the currency markets on Monday and Tuesday this week.
  • The RBI will inject liquidity through its Variable Rate Repo (VRR) auction on February 14 and it is intended to be one of the largest liquidity injections under the relatively new program.
  • The decline in interbank liquidity is a direct result from RBI currency intervention and in his post monetary policy meeting statement the RBI Governor indicated that additional measures will be provided, whilst re-iterating that the intention was to keep the currency stable and avoid volatile shifts, albeit not targeting any specific levels.
  • RBI Governor Malhotra also announced that the upcoming implementation of the new Liquidity Coverage Ratio will be deferred to 2026.
  • The large banks had been vocal in their opposition to the LCR implementation citing potential negative impacts on an already strained environment for liquidity.
  • The Financial Benchmarks India Overnight Mumbai Interbank Outright Rate was steady yesterday at 6.40% off from the highs of 7.08% in January.