Mumbai: The Reserve Bank of India has supported liquidity to its full extent through long-term variable rate repo (VRR) auctions, foreign exchange swaps and doubling down on its open market operation (OMO) purchases in its auctions and on screen.
Since January 30, the RBI has taken measures to infuse durable liquidity via various OMOs and VRRs, in addition to ₹43,000 crore via foreign exchange swaps. In addition, the central bank conducted screen-based OMOs for ₹59,000 crore.
Each such auction saw bids higher than the notified amount, suggesting demand for durable liquidity.
Most institutions, however, have factored in more such liquidity measures throughout the first half of 2025.
“We expect more OMOs in primary/secondary markets, VRRs and foreign exchange swaps, especially as the RBI’s forward book is heavy with large near-term maturity,” Madhavi Arora, chief economist at Emkay Global Financial Services, said in a report.
Additionally, both the long-term VRR auctions will mature on April 4, a few days before the central bank’s Monetary Policy Committee meeting on April 7-9, giving officials some time to assess liquidity conditions before considering announcing new measures during the meeting, traders said.
