Liquidity Snapshot: RBI’s July 25 Operations Signal Tightening Bias

India’s money markets reflected cautious liquidity management on July 25, with the Reserve Bank of India (RBI) executing key operations to balance systemic cash flows.

Key Highlights:

- The Indian rupee opened marginally stronger at 86.47 per US dollar, up 0.05% from the previous close of 86.5150, indicating mild forex optimism.

- Scheduled commercial banks held cash balances of Rs 9.25 trillion with the RBI, slightly below the fortnightly reserve requirement of Rs 9.63 trillion.

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

Liquidity Operations:

- RBI conducted a refinance operation worth Rs 102.99 billion to support short-term funding needs.

- No fresh government cash auctions were announced, reinforcing a neutral fiscal stance.

- Net liquidity absorption from RBI’s standing deposit facility and reverse repo operations stood at Rs 2.55 trillion, pointing to a tightening bias.

Sources: Reuters, RBI Bulletin, The Week.