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RBI Injects $21 Billion to Ease Liquidity

  • 07 Mar 2025

On 5th March 2025, the Reserve Bank of India (RBI) announced a $21 billion liquidity infusion to ease lending conditions and support economic growth. The move aims to stabilize the financial system amid tight liquidity conditions.

Key Points

  • Liquidity Infusion Measures: RBI will conduct two open market operations (OMOs) totaling Rs. 1 trillion on March 12 and 18, alongside a $10 billion USD-INR buy-sell swap on March 24.
  • Tight Liquidity Conditions: The liquidity deficit stood at Rs. 204.2 billion on March 4, the lowest since December 15, due to tax outflows, foreign exchange interventions, and lower government spending.
  • Policy Impact: The move follows a 25-basis-point interest rate cut last month, aimed at improving policy transmission and boosting credit availability.
  • Economic Context: India’s economy grew by 6.2% in Q3 (Oct-Dec) due to higher consumer and government spending.
  • Market Reaction: Bond markets and the rupee are expected to react positively, with forward premiums likely to decline, signaling confidence in the RBI’s liquidity management.