India’s currency in circulation has grown by only Rs 500 billion in the first four months of this fiscal year that began in April, nearly half the pace of the same period a year ago.
“Economic activity is completely back to pre-pandemic levels, and hence there is hardly any need for panic-induced cash withdrawals, leading to a liquidity crunch,” said a trader at a state-run bank.
Increase cash in circulation 508 billion ($6.38 billion) for April-July, compared to Rs 928 billion for the same period last year and Rs 2.25 trillion in 2020-21, the peak of the lockdown, RBI data showed Is. ,
The currency in circulation had jumped over Rs four trillion in 2020-21, as against Rs 2.80 trillion in the previous fiscal, and market participants expect another fall in the current year.
“We don’t have any major polls in the remaining part of the year and may see an increase of around Rs two trillion for the full year. The impact on the overall surplus may not be big,” said a dealer with a primary dealership.
Meanwhile, the liquidity surplus of India’s banking system remains around Rs two trillion, and Kotak Mahindra Bank expects the surplus to rise to around Rs 1.50 trillion by the end of this week.
The one-day interbank call money rate was 4.75%, while the overnight tripartite repo or TREPS rate was 4.50%.
Traders are also awaiting the RBI’s monetary policy decision tomorrow, and apart from hike in the repo rate, any measures or comments on liquidity management will affect the money market.
This story has been published without modification in text from a wire agency feed. Only the title has been changed.
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