India market levels show effective rate has risen; cenbank meeting in focus

© Reuters. FILE PHOTO: A man walks behind the Reserve Bank of India logo inside its headquarters in Mumbai, India, April 8, 2022. REUTERS/Francis Mascarenhas/File Photo

The Reserve Bank of India, in its policy meeting in August, mandated that banks maintain an incremental cash reserve ratio of 10% on some deposits, tightening the rupee's liquidity. That move has since been eased out in phases since September. While market participants expect the RBI to maintain its tight leash on liquidity in the coming weeks, they don't anticipate any drastic measures.

While banks have not been actively participating in VRRRs, the RBI has net sold bonds worth 71 billion rupees in the open market in the four weeks to Sept. 22.

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