FIIs continue to influence liquidity - RBI

Mumbai, July 30 (UNI) Movements in capital flows and cash balances continue to influence liquidity in the country, The Reserve Bank of India said in its Macroeconomic and Monetary Development document today.

Net inflows reached 46.2 billion US Dollars, ahead of the current account deficit of 9.6 billion US dollars.

The observation, which has preceded the policy review due tomorrow, is believed to be a pointer to the monetary measures to be implemented by the banking regulator.

In the quarterly review, RBI is expected to introduce a road map for the economy in order to steady the liquidity levels.

''Capital flows have remained buoyant led by FII inflows. During 2007-08, FIIs registered net inflows of 8.4 billion US dollars as compared with outflows of 2.0 billion US dollars in the corresponding period of 2006-07.

FDI inflows were 1.6 billion US dollars during April 2007 as against 0.7 billion US dollars a year ago. Non-resident deposits registered net outflows amounting to 274 million US dollars during April 2007 as against net inflows of 253 US dollar million during April 2006.'', RBI said in a statement.

Country's foreign exchange reserves had also marked a corresponding growth during the period, to 222 billion US Dollars with an increase of 22.9 billion US Dollars since March, 2007.

Growth in bank credit also moderated after the strong pace in the preceding three years while Non-food credit by scheduled commercial banks (SCBs) moderated to 24.4 per cent to Rs 3.6 lakh crore as on July 6, 2007 from Rs 3.7 lakh crore a year ago.

Call money rates also softened during the first quarter of this fiscal and remained below the reverse repo rate on many occasions on the back of easier liquidity conditions, said RBI in the statement.

UNI