RBI has bond sales, FX swaps to manage liquidity: RBI Governor
Some of the surplus liquidity in the banking system would be withdrawn over time through foreign exchange interventions and banks' reserve requirements
RBI Governor Sanjay Malhotra disclosed on Friday the central bank's intention to utilize various tools to manage liquidity and maintain the overnight rate in line with the repo rate. Malhotra stated that surplus liquidity in the banking system may be gradually reduced through foreign exchange interventions and banks' reserve requirements.
He emphasized that the RBI possessed multiple options beyond the statutory liquidity ratio review, including open market operations and foreign exchange swaps. Following the mention of debt sales as a potential measure to address rupee liquidity, Indian bonds experienced a decline, with yields reaching their highest levels in over three months.
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