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Wednesday, August 21, 2013

RBI moves to restore liquidity but rupee continues free-fall.

The Reserve Bank of India has said it will buy government bonds on Friday and take other measures to inject liquidity into the banking system. The move comes after a series of tightening measures unsuccessfully attempted to stem the free-fall in the rupee and instead caused a cash crunch. Yields on 10-year government bonds were -57 bps at 8.35% at the time of writing, but Indian shares were -1.9% and the USD-INR was +2% at 64.391.

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