Even as the monetary authority said it will announce the fourth tranche of government bond buy back in as many weeks today to infuse liquidity, deputy governor Subir Gokarn termed the current cash crunch as temporary and is due to the advance tax payout that sapped Rs 69,000 crore from the system. "The immediate pressure on liquidity is due to the advance tax payout. We have had about Rs 69,000 crore going into the government kitty last week and now we will have to wait and see. Obviously, that money is going to be spent over a period of time. "So the current pressure is purely short-term. And we don't expect this to remain and things will normalise over the next few days," Gokarn said on the sidelines of a round table organised by Ficci here. Gokarn further said RBI will announce another open market operation (OMO) later today but did not quantify it. Since the last mid-November, it had announced three buyback of government securities of Rs 10,000 crore each. This comes in the wake of the deep cash crunch in the system. Yesterday, banks borrowed a record Rs 1.66 trillion-- which was a yearly high--from the temporary liquidity adjustment window of the central bank. Today, the lenders reportedly borrowed a tad less at Rs 1.64 trillion from the short-term borrowing window called repo. Banks borrow from this daily cash injection window at 8.5 percent. The RBI is scurrying to infuse liquidity into the system as there are no takers for the government debt in a sapped market, even as the government is trying to finish its borrowing plan for the fiscal. The government is slated to borrow a whopping Rs 4.7 trillion from the market this fiscal and it has already taken in 68 percent of that. When asked whether the RBI will put up an OMO calendar going forward or till liquidity returns to the market, Gokarn answered in the negative saying, "I don't think we want to put the OMO in a calendar. We are basically responding with our OMOs to the emerging liquidity conditions." "To the extent that we see there is tightness, as I just said, today's situation is temporary because of the advance tax pressure, but even before that and after that there may be pressure and we will respond to that accordingly. "We are announcing another round of OMO today. And we will follow that pattern," the deputy governor who is in charge of the monetary policy said. On the rupee, he said, "although the rupee is at 53 a dollar, it has been relatively stable (now) if you go by the intra-day volatility, than it was some weeks ago. And this shows that some of the measures we have taken recently are helping to keep some boundaries on the rupee."
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