With an objective of keeping liquidity at neutral level, Reserve Bank is likely to infuse Rs 55,000 crore through open market operations (OMO) in the second half of this financial year, says a report.
"We expect that another Rs 55,000 crore of durable liquidity needs to be infused through OMO purchases in second half of 2016-17. Our base case scenario is built on RBI's stated objective of neutral liquidity, which ensures minimal shortages as well as minimal surpluses," India Ratings and Research said in a note.
It said since Rs 1.05 trillion liquidity has been infused by RBI in the first half of this fiscal, necessity of similar amount of OMO in second half will only be limited to certain conditions.
"It would be contingent upon subdued net forex flows, or lower than estimated USD 17.4 billion balance of payment surplus, sharp rise in currency in circulation (CIC) against tepid growth in nominal variables and RBI continuing to maintain high surplus liquidity in the interbank market against the stated strategy for neutral liquidity," it said.
The note said after financing of the current account deficit (CAD), it expects the capital inflows to add nearly USD 17.4 billion (Rs 1.18 trillion) to the forex reserve in the 2016-17.
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