RBI Conducts 30-Day VRRR Auction to Manage Liquidity Surplus
· Business · Economic Times, Zee News
The Reserve Bank of India is launching a 30-day variable rate reverse repo auction to withdraw ₹7 lakh crore from the inter-bank market. This measure aims to control inflation as liquidity levels are predicted to exceed ₹15 lakh crore by the end of September. The excess liquidity has caused call money rates to drop to 4.95%, below the current policy repo rate of 5.25%. The central bank is attempting to align overnight rates more closely with its policy target. Analysts note that the surplus has been driven by recent foreign exchange inflows.
Why it matters
The RBI's intervention is designed to stabilize interest rates and curb inflationary pressures caused by the current record-high liquidity in the banking system.
Read the original report — Economic Times
Join us on Telegram
Breaking news the moment it lands. At 10,000 members we ship the Android app.