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The Reserve Bank
of India would not rule out any instruments to manage liquidity
and keep the overnight rate aligned with the repo rate, Governor
Sanjay Malhotra told CNBC-TV18 on Friday.
Some of the surplus liquidity in the banking system would be
withdrawn over time through foreign exchange interventions and
banks’ reserve requirements, Malhotra said, adding that the
central bank’s objective was to maintain appropriate liquidity
conditions.
“We have enough tools to manage liquidity, other than VRRR,
such as open market operations or FX swaps.”
Indian bonds extended their declines after the mention of
debt sale as an option to remove rupee liquidity, with yields at
their highest levels in over three months.