Reserve Bank of India will conduct another three day Variable Rate Reverse Repo (VRRR) auction next week in order to draw out up to Rs 2,00,000 crore.
The move is in line with the central bank’s stated policy as the RBI governor earlier hinted at unwinding excess cash through auctions.
On December 20, in a similar auction, in a surprise move the Central bank removed Rs 81,160 crore liquidity from the system.
Apart from this, the Reserve Bank has been conducting 4 day and 7 day auctions.
Short-term rates have already started moving up with the latest Treasury Bill auctions yielding 8-18 basis points higher than the cut-offs across three maturities about a week ago, RBI data showed.
In the December bi monthly policy, RBI Governor Shaktikanta Das had stressed on auction root as an important move to remove cash from the system.
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