INR Slides to 85.9750—RBI’s ₹58.81 Billion Refinance Signals Liquidity Jitters

The Indian Rupee opened 0.2% weaker at 85.9750 per US dollar on July 15, down from its previous close of 85.81. The dip marks a two-week low, driven by corporate dollar demand and equity-related outflows, even as regional currencies showed resilience.

 

Liquidity Pulse: RBI’s Money Market Operations

 

The Reserve Bank of India’s latest liquidity snapshot reveals a mixed picture of systemic liquidity and short-term funding pressures.

 

Key highlights:

 

- Banks’ cash balances with the RBI stood at a robust 9.94 trillion rupees, indicating healthy reserve levels

 

- The government’s surplus cash balance with the RBI was nil, suggesting no excess funds were available for auction

 

- RBI extended 58.81 billion rupees in refinance support, likely aimed at easing short-term liquidity constraints

 

- Indian banks tapped 8.69 billion rupees via the Marginal Standing Facility (MSF), reflecting overnight funding needs amid tightening conditions

 

Market Implications and Outlook

 

The combination of a weaker rupee and active RBI liquidity operations signals cautious monetary management amid global uncertainties.

While the refinance and MSF usage remain within expected bounds, the absence of surplus government cash may limit immediate fiscal injections. Traders are closely watching RBI’s next moves, especially in the context of bond yields and inflation expectations.

 

Sources: Reuters, Economic Times, Financial Express, Business Standard, RBI Press Releases.