In a bid to arrest the volatility in the foreign exchange market, the Reserve Bank of India (RBI) followed up last week’s move of raising the Marginal Standing Facility (MSF) by further tightening systemic liquidity. The system-wide Liquidity Adjustment Facility (LAF) has been capped at 0.5% of NDTL (net demand and time liabilities) with immediate effect whilst banks have also been mandated to maintain higher daily minimum balances with the RBI as balances under the Cash Reserve Ratio (CRR).
This is the second such move by RBI after Last Weeks Rise of 200 bps on MSF. RBI moves to protect Indian Rupee due to failed policies and Governance by the Congress Government at center is going to have a lot of co-lateral damage in the entire Indian Industry as Foreign Investors are Fleeing India.
