Thursday 24 April 2014
News updated at 10:10 PM IST
Weather
Max: 34.6°C
Min : 22.8°C
In Bangalore
Generally cloudy

RBI acts to tackle Re volatility

Mumbai, June 15, 2013 DHNS:
Reuters File Image.

The Reserve Bank of India (RBI) on Monday announced a slew of measures to ensure stability in the foreign exchange market which on macro-level seeks to bring down the country's current account deficit (CAD).

The rupee has depreciated markedly in the last six weeks, although the market perception of likely tapering of US quantitative easing has had triggered outflows of portfolio investment, particularly from the debt segment. This indicated that the demand for dollar against rupee surged owing to improved domestic liquidity situation.

In the given situation, the RBI felt the need to restore stability to the foreign exchange market and announced measures like recalibrating the marginal standing facility (MSF) to be 300 basis points above the repo rate—the rate at which bank borrows money from the RBI for short term use—with immediate effect.


One basis point is the equivalent of one-hundredth of a per cent. Consequently, the MSF rate will now be 10.25 per cent. Also, the bank rate stands adjusted to 10.25 per cent with immediate effect.

The overall allocation of funds under the liquidity adjustment facility (LAF) will be limited to 1 per cent of the net demand and time liabilities (NDTL) of the banking system, which is estimated to be Rs 75,000 crore for this purpose, said the RBI in a statement released in the late hours of Monday.

Even as the allocation to individual banks will be made in proportion to their bids, subject to the overall ceiling, this change in the LAF will come into effect from July 17, 2013.
Further, the apex bank will conduct Open Market Sales of Government of India Securities of Rs 12,000 crore on July 18, 2013. Details of the securities included for the OMO sale auction will be announced through a separate press release on Tuesday.

Meanwhile, the rupee closed at 59.89/90 per dollar against 59.56/57 on Friday last.

Go to Top

Photo Gallery
A fan offers sweet to a poster of Sachin Tendulkar on his 41st birthday, in Bikaner on Thursday...

A fan offers sweet to a poster of Sachin Tendulkar on his 41st birthday, in Bikaner on Thursday...

A physically challenged boy shows his voter identity card after casting vote for the Lok Sabha...

A physically challenged boy shows his voter identity card after casting vote for the Lok Sabha...

Elderly women outside a polling booth before casting their votes in Malda, West Bengal on ...

Elderly women outside a polling booth before casting their votes in Malda, West Bengal on ...

Voters show their identity cards as they wait to cast votes for Lok Sabha elections at a village...

Voters show their identity cards as they wait to cast votes for Lok Sabha elections at a village...

Bollywood actor Shah Rukh Khan displays the indelible ink mark on his finger after casting his ...

Bollywood actor Shah Rukh Khan displays the indelible ink mark on his finger after casting his ...

Catholic nuns show their inked finger after casting their vote for the Lok Sabha polls in ...

Catholic nuns show their inked finger after casting their vote for the Lok Sabha polls in ...

Malayalam film actor Mammootty presents a memento to prominent Malayalam writer and Janapith ...

Malayalam film actor Mammootty presents a memento to prominent Malayalam writer and Janapith ...

Women voters show their voter identity cards as they wait in queues to cast votes for Lok Sabha ...

Women voters show their voter identity cards as they wait in queues to cast votes for Lok Sabha ...

Bollywood legend Amitabh Bachchan, his wife Jaya Bachchan,  son Abhishek Bachchan, and daughter...

Bollywood legend Amitabh Bachchan, his wife Jaya Bachchan, son Abhishek Bachchan, and daughter...

Industrialist Mukesh Ambani with wife Nita Ambani and sons showing ink marked fingers after ...

Industrialist Mukesh Ambani with wife Nita Ambani and sons showing ink marked fingers after ...

Copyright 2014, The Printers (Mysore) Private Ltd., 75, M.G Road, Post Box 5331, Bangalore - 560001
Tel: +91 (80) 25880000 Fax No. +91 (80) 25880523