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Policy▼ Bearish for Indian equities
India's $133 billion cash deluge puts RBI on a more hawkish policy path
The brief
- Record inflows from Indians abroad reached $133 billion, leaving banks flush with cash
- Overnight rates fell below the RBI's 5.25 per cent policy rate
- A hawkish policy path could affect bank funding costs and rate-sensitive Indian equities
- Result of the 4-day Variable Rate Reverse Repo (VRRR) auction held on October 01, 2026
- A weak rupee would push RBI to follow tightening path
- RBI MPC Preview: BofA sees 25 bps rate hike as US yields and crude surge
- India Inc. Faces Higher Borrowing Costs as Short-Term Yields Surge
- Growth Support vs Deficit Target: The trade-off facing the Centre
RBI dollar-rupee swaps to drain liquidity
The RBI conducted sell-buy dollar-rupee swaps with lenders over two weeks, withdrawing rupees from the financial system. The swaps were worth at least $10 billion as banks held excess cash after measures to attract more than $140 billion in foreign capital.
Thursday, 1 October
- India's $133 billion cash deluge puts RBI on a more hawkish policy path