RBI’s liquidity-boosting measure under-performs as FX intervention offsets gains
The RBI’s CRR cut has only released half the expected liquidity as FX intervention absorbs the remainder, prompting possible OMOs ahead.
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16h agoRBI’s liquidity-boosting measure under-performs as FX intervention offsets gains
The Reserve Bank of India’s phased 100-basis-point cut in the cash reserve ratio (CRR), intended to release roughly ₹2.5 trillion into the banking system, has so far yielded only about half the intended liquidity. Analysts attribute the under-performance to concurrent FX-market interventions and maturity drain of forward contracts. The banking system, instead of moving into surplus, briefly recorded a deficit after the operations began. With yields remaining elevated and liquidity tight, the RBI may need to launch open market operations (OMOs) or other long-term tools to stabilise funding conditions.
cautious
16h agoRBI’s liquidity-boosting measure under-performs as FX intervention offsets gains
The Reserve Bank of India’s phased 100-basis-point cut in the cash reserve ratio (CRR), intended to release roughly ₹2.5 trillion into the banking system, has so far yielded only about half the intended liquidity. Analysts attribute the under-performance to concurrent FX-market interventions and maturity drain of forward contracts. The banking system, instead of moving into surplus, briefly recorded a deficit after the operations began. With yields remaining elevated and liquidity tight, the RBI may need to launch open market operations (OMOs) or other long-term tools to stabilise funding conditions.
cautious
RBI’s liquidity-boosting measure under-performs as FX intervention offsets gains
about 17 hours ago
1 min read
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The RBI’s CRR cut has only released half the expected liquidity as FX intervention absorbs the remainder, prompting possible OMOs ahead.
The Reserve Bank of India’s phased 100-basis-point cut in the cash reserve ratio (CRR), intended to release roughly ₹2.5 trillion into the banking system, has so far yielded only about half the intended liquidity. Analysts attribute the under-performance to concurrent FX-market interventions and maturity drain of forward contracts. The banking system, instead of moving into surplus, briefly recorded a deficit after the operations began. With yields remaining elevated and liquidity tight, the RBI may need to launch open market operations (OMOs) or other long-term tools to stabilise funding conditions.
The Reserve Bank of India’s phased 100-basis-point cut in the cash reserve ratio (CRR), intended to release roughly ₹2.5 trillion into the banking system, has so far yielded only about half the intended liquidity. Analysts attribute the under-performance to concurrent FX-market interventions and maturity drain of forward contracts. The banking system, instead of moving into surplus, briefly recorded a deficit after the operations began. With yields remaining elevated and liquidity tight, the RBI may need to launch open market operations (OMOs) or other long-term tools to stabilise funding conditions.
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Oct 21, 2025 • 08:14 IST