Reserve Bank steps to increase liquidity to support stagnant money markets

New delhi date. March 12, 2020, Thursday

The Reserve Bank of India (RBI) has decided to exchange 6-month US dollars for liquidity measures as a way to boost liquidity markets as a result of the coronavirus. In the first phase, the RBI will exchange about two billion dollars. The rupee had lost 74.34 against the dollar on Thursday, which is close to the all-time low of 74.48.

Investors' capital has been heavily eroded in the Indian stock market over the past few days. On Thursday, the stock market was severely disrupted, with the US stopping every trip with Europe.

The BSE Sensex has fallen nearly 10,000 points since its peak week. There is also debate in the market that the Reserve Bank may reduce the repo rate even before their next review meeting to provide liquidity in the market.

The areas which have been disrupted due to the dilapidated supply chain will look to ease the issue of repairs and create more liquidity in the market, sources at the Reserve Bank said.

The Reserve Bank's Monetary Policy Committee (MPC) meeting is scheduled for March 31. It is unlikely that a decision will be made regarding interest rates before this meeting.

RBI has not reduced the repo rate in the current year due to the strong rise in retail inflation over the past few months.