How will RBI neutralize Rs 7 trillion of fx liquidity - Liquidity Cheat sheet-Jan 21
RBI has added a whopping Rs 7 trillion of liquidity as it built up fx reserves this fiscal year. Along with huge government spending, the liquidity surplus is highly inflationary in nature and RBI has to sterilize the liquidity. It has taken initial steps to suck out excess liquidity through term reverse repos but it needs to have a more longer term solution such as MSS bonds.
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