RBI liquidity absorption rises as money market rates track global tightening bias

Liquidity absorption by the Reserve Bank of India increased this week as surplus conditions narrowed amid higher government cash balances and persistent global rate pressures. Market participants noted that overnight money market rates have moved closer to the policy corridor, reflecting tighter systemic liquidity. Dealers highlighted that while domestic factors remain manageable, global monetary tightening expectations—particularly from the US—continue to influence short-term funding conditions. Strategists expect RBI to maintain a calibrated stance to prevent volatility spillovers into credit and FX markets.