….............Liquidity has been in deficit of around Rs 1.2 lakh crore daily, despite a 50-bp (basis point) cut in the cash reserve ratio by the RBI last month. The central bank has also been infusing liquidity of about Rs 8000-10,000 crore every week via bond purchases in open market operations. However, this is being offset by higher market borrowings of Rs 12,000-14,000 crore every week by the government. Traders say the RBI’s forex intervention in the forwards market in the November-December period may also be contributing to the tightness in rupee liquidity now. According to RBI data, the central bank intervened to the tune of $1.37 billion in December and $1.6 billion in November 2011.
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