RBI to spark money market recovery by reverse repo operation worth Rs 2 trn

India’s key money-market rates and yields on short-term debt are set to rise after the central bank took its first small step to unwind emergency pandemic measures.

The Reserve Bank of India will aim to drain 2 trillion rupees ($27.3 billion) of banking funds via a 14-day reverse repo operation on Jan. 15, the central bank said in a statement late Friday. This is the first move in a phased normalization of the central bank’s liquidity operations, it said.

There has been growing consensus among traders that the RBI will have to start draining excess cash, as surging liquidity caused money-market rates