India's Central Bank reduces liquidity by $2.6 billion

The article focused on the measures taken by the Reserve Bank of India to withdraw liquidity from the banking system in order to control inflation and strengthen monetary policy. It announced the sale of government bonds worth 250 billion rupees (approximately $2.58 billion) through open market operations, and increased the cash reserve requirement for banks from 90% to 99% starting October 16, to absorb excess liquidity. This step follows the first interest rate hike in four years, with expectations that excess liquidity will decrease to below 1% of deposits in the coming months, as the yield curve flattens and the gap between short- and long-term bond yields narrows. The measures aim to reduce the liquidity surplus, which has exceeded 7 trillion rupees since September, and to continue gradually withdrawing liquidity until the end of the fiscal year in March, in order to promote financial market stability and control inflation.

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