If liquidity surplus improves sharply because of this move, "the weighted average call rate could sustain below the repo rate for the next few weeks," said Raju Sharma, chief investment officer – debt at IDBI Mutual Fund. Most economists expect the note withdrawal to be less disruptive for the economy than the 2016 demonetisation. "As such, markets may anticipate some comfort on the liquidity front." India's banking system liquidity surplus has averaged around 600 billion rupees so far in May.Ībout 2.5-3 trillion rupees of banking sector liquidity leaks out as currency in circulation each year, said Pranjul Bhandari, chief India economist at HSBC. ICICI Securities Primary Dealership estimates the liquidity surplus could increase to 1.5-2 trillion rupees. Kotak Institutional Equities estimates that liquidity could improve by around 1 trillion rupees, while QuantEco Research pegs the potential liquidity impact at 400 billion rupees to 1.1 trillion rupees. The value of such notes in circulation is 3.6 trillion rupees ($44.02 billion). Customers holding these notes can deposit them or exchange them for smaller notes by Sept.30, 2023. ![]() The Reserve Bank of India on Friday said that it will start withdrawing 2,000-rupee notes from circulation, although they will remain legal tender. MUMBAI, May 22(Reuters) - The Indian central bank's decision to withdraw its highest denomination currency note from circulation is likely to improve banking system liquidity, bringing down recently elevated short term rates, analysts and bankers said.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |