The Reserve Bank of India (RBI) has announced plans to inject almost ₹3 lakh crore into the domestic market through Open Market Operations (OMOs) as part of efforts to neutralise the impact of its foreign exchange interventions. This move comes amid sustained central bank activity in the forex market aimed at stabilising the rupee and managing external volatility.
Key Highlights
- RBI plans ₹3 lakh crore liquidity infusion through OMOs to neutralise forex intervention impact
- Move aims to stabilise money markets and manage excess banking system liquidity
According to market participants, the RBI’s foreign exchange operations in recent months have resulted in significant addition of liquidity into the banking system. To address this, the central bank has scheduled a series of OMOs in government securities. These operations involve purchasing long-term government bonds from the market, thereby infusing durable liquidity while helping maintain orderly conditions in the fixed income space.
Analysts view the liquidity adjustment strategy as a balancing act. By offsetting the excess system liquidity created by forex intervention with sizeable OMO purchases, the RBI aims to keep inflationary pressures in check and support its monetary policy objectives. The planned operations are expected to span several weeks, contributing to better control over money market rates.
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Financial markets have reacted to the announcement, with yields on government securities adjusting in anticipation of the large‐scale liquidity absorption. Traders noted that this step could help ease volatility in short-term rates while anchoring expectations ahead of upcoming macroeconomic data releases.
The RBI’s decision reflects a broader focus on synchronising its forex management and domestic liquidity frameworks. As global uncertainties persist, the central bank continues to employ a mix of tools to ensure financial stability, support growth, and preserve macroeconomic balance.
