Image Source: Business Today
According to the Reserve Bank of India’s latest data for the week ending October 24, currency in circulation grew 8.5 percent year-on-year, up from 7 percent a year ago. However, reserve money growth decelerated to 1.9 percent, suggesting slower liquidity expansion compared to the previous period.
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Currency Momentum:
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The RBI reported that currency in circulation increased 8.5 percent year-on-year in the week to October 24, reflecting higher cash demand ahead of festive spending.
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This marks a notable uptick compared to the 7 percent growth recorded during the same week last year.
Reserve Money Trends:
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Reserve money growth, which tracks the expansion of base liquidity, slowed to 1.9 percent year-on-year.
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The moderation indicates tighter liquidity conditions relative to the 9 percent growth seen a year earlier.
Economic Context:
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The rise in circulating currency suggests heightened cash transactions amid Diwali-season consumption and rural disbursements.
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The slowdown in reserve money may signal the central bank’s calibrated approach to maintaining monetary stability amid inflationary pressures.
Monetary Outlook:
Analysts expect liquidity management measures to remain balanced as credit demand and cash circulation continue to fluctuate post-festive season.
Sources: Reuters, Reserve Bank of India weekly statistical supplement.
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