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India RBI may increase debt sales to drain liquidity after first such auction in 9 years
MUMBAI: Indian bond traders expect the central bank to step up bond sales for liquidity absorption, as policymakers likely seek to strengthen transmission of expected rate hikes, after the first such auction in nine years recorded strong interest. Excess banking-system liquidity can weaken monetary-policy transmission, reducing banks’ need to borrow at the Reserve Bank of India’s policy rate, delaying increases in lending rates and supporting demand for government bonds. Earlier in the day, the RBI absorbed cash equivalent to nearly 0.2% of total banking-system deposits, selling bonds worth 50...
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