Rupee can depreciate another 4% despite RBI's liquidity support measures

The rupee did not react much to the measures announced since this was more towards a short-term liquidity measure which the markets had expected from the RBI.

The Reserve Bank of India (RBI) unleashed a slew of measures to help the economy tide over the current crisis. It has launched  targeted long-term repo operations (TLTRO) 2.0 of Rs 50,000 crore. Banks would be required to deploy at least 50 per cent of funds availed under this facility in bonds of smaller non-bank finance companies (NBFCs) and micro-finance institutions (MFIs).

This move is intended to reduce the funds being channelised only to the top rung NBFCs and ensure more equitable distribution of liquidity. The move has had an immediate impact. Commercial Papers (CPs) and short maturity (two