Karan Mehrishi, Lead Economist at Acuité Ratings and Research"RBI is expected to employ various liquidity management tools to ease the tight liquidity and the volatility in the money markets triggered by the sharp depreciation in the rupee and the recent defaults in Commercial Papers (CP) by a large conglomerate. The tightness in the liquidity was clearly visible with the spurt in the weighted average call money rate (WACR) and its differential with the repo rate narrowing to only 4 bps over the last fortnight. RBI has already permitted banks to avail additional liquidity, if necessary from a larger pool of high quality liquid assets (HQLA) which is kept as SLR. In the opinion of Acuité Ratings, further liquidity management measures can be expected in the run up to the monetary policy statement in early October." |
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