Rupee Wobbles, Liquidity Holds: RBI’s July 18 Snapshot Reveals Mixed Signals

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India’s financial pulse showed signs of cautious movement on July 18, 2025, as the rupee opened 0.1% lower at 86.215 against the US dollar, slipping from its previous close of 86.1475. The dip reflects ongoing pressure from global dollar strength and domestic liquidity dynamics.

Currency movement:

- The rupee’s decline aligns with broader Asian currency trends, impacted by US inflation concerns and rising Treasury yields.

- Market watchers attribute the fall to persistent foreign portfolio outflows and dollar demand from importers.

RBI’s money market operations:

- Banks’ aggregate cash balances stood at ₹9.92 trillion, indicating robust liquidity in the system.

- The central government’s surplus cash balance with the RBI was nil, suggesting active fiscal deployment or recent outflows.

- RBI refinanced ₹61.50 billion through its regular liquidity adjustment facility.

Borrowing and liquidity trends:

- Indian banks borrowed ₹1.51 billion via the Marginal Standing Facility, a modest uptick signaling short-term liquidity needs.

- No major disruptions were reported in interbank lending, and repo operations remained stable.

Outlook and implications:

- Analysts expect the rupee to trade between 85.5 and 87.5 in the near term, influenced by US rate expectations and RBI’s intervention strategy.

- The central bank is likely to continue managing volatility through swaps and targeted liquidity tools.

While the rupee’s dip may raise eyebrows, India’s banking system appears well-cushioned, with the RBI maintaining a steady hand on the liquidity tiller.

Sources: Reuters, Economic Times, Hindustan Times, The Unn, NewsBytes.