Wednesday, July 24, 2013

There is a pattern :)

When Narendra Modi goes ballistic RBI acts for the first time on Repo Limits.When CNN-IBN says congress is screwed due to inflation, RBI acts for the second time in Repo Limits and CRR.
Is RBI is a political Institution? This is my first question.

We are talking about this farce of allowing banks to do easy business for quite some time now. It is ironic that RBI has found out this all of a suddenly and started tightening. I am not sure whether this will work or not? Given the fact that banks Repo borrowing touched as low as 40000 Crores in recent days. But this we need to wait and see.

Another worrying factor is that whenever RBI wants to rein  in the liquidity, it must focus on the language it uses. If they give an indication that these measures are temporary in nature, then the markets will not care a shit about the measures as they would think these measures are anyway temporary. So the anticipated effects of liquidity wont happen. RBI should ask the bloody corrupt politicians not to open their ugly mouth about these measures. If the politicians including the Prime Minister says these measures are temporary, then why bond market or forex market should react to these measures?

Finally these half hearted measures are laughable. RBI should directly raise the Repo if it is serious. Also it should come out clearly saying that it is not about curbing forex speculation. It is about curbing liquidity. Otherwise the comedy farce will continue.

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