.........the
collateral damage is far more than the benefit is becoming clearer. A
day after the announcement, RBI had to open a special liquidity window
for bleeding fund houses, with most liquid funds showing negative
returns following a bond price crash. There are signs the central bank
may be trying to find a way out of the mess that it had possibly not
bargained for. It cancelled treasury bills auction; held back sale of
securities at higher yields in the open market; and, lastly, let the
government bond auction flop, letting a chunk of securities devolve.
These are hints that the RBI is not comfortable with the high yields.
But these are subtle messages that stay within the money markets of
Mumbai. Undoing the damage would call for bolder steps.
Read - ET
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