Liquidity not under stress: RBI

Written by: Pti
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New Delhi, Aug 12: The upheaval in domestic markets that followed the US economic downgrade notwithstanding, RBI today (Aug 12) said the liquidity in the Indian banking system was not under stress and the central bank was monitoring the situation closely.

"We monitored the situation very closely since Monday and we have not seen any stress at this point. The quantum of liquidity is quite within range..," RBI Deputy Governor Subir Gokarn told reporters at a CII event here.

Rating agency S&P had on last Friday downgraded the US sovereign rating to AA+, from AAA.

Following that the RBI on Monday issued a circular saying that it was taking steps to ensure steady flow of rupee and dollar liquidity in the system to check volatility in the forex market.

The stock fell nearly 3 per cent in two days of volatile trading and Rupee weakened to below 45 to a dollar.

Gokarn said the inter-bank lending rates or call rates and other money market or market repo rates "have been very stable".

He said over the last few days, the RBI has been monitoring the Rupee-Dollar movement and emphasised on ensuring steady supply of liquidity into the banking segment. Gokarn, however, said that for RBI to assess the longer term impact of US downgrade on India would take some time. 


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