India boosts efforts to drain surplus cash as dollar flows swell
The latest move marks a shift towards larger and longer-tenor operations as the RBI seeks to absorb liquidity generated by its measures to attract foreign inflows to shore up the rupee
The Reserve Bank of India (RBI) has intensified efforts to absorb excess liquidity in the financial system, driven by a surge in foreign-currency inflows. The RBI will conduct a 15-day variable rate reverse repo (VRRR) auction worth ₹6 lakh crore ($62.9 billion) on August 31 to temporarily soak up surplus funds parked with the central bank through VRRR auctions.
This shift to larger and longer-tenor operations comes as India attracted $72.8 billion in dollar inflows as of August 21, surpassing market expectations. While the VRRR auctions have absorbed nearly half the surplus liquidity, additional measures may be necessary as liquidity peaks in September, according to Gaura Sen Gupta, chief economist at IDFC FIRST Bank.
Brief written by urgent.news from Hindu BusinessLine's own syndicated text. Machine-written — may contain errors; check the original before relying on it.
