Nepal Rastra Bank (NRB) has resorted to monetary instruments to manage liquidity stress in the bank and financial institutions (BFIs) through the open market operation. As the excess liquidity continues diminishing, the injection of liquidity far outweighs the steps to maintain liquidity in balance.
The data provided by the Monetary Management Department recorded that the NRB has injected Rs. 1,649 billion meanwhile it mopped up Rs. 60 billion in the current fiscal year (FY).
According to the Monetary Management Department data in the month of November, NRB injected the liquidity of Rs. 180 billion through the Repo, Rs. 47.14 billion through the Overnight Repo and Rs. 1,649.3 billion through Standing Liquidity Facility (SLF). On the other side, it mopped up Rs. 28.35 billion through the Reverse Repo and Rs. 31.65 billion through deposit collection.
NRB’s Executive Director of Research Department, Prakash Kumar Shrestha, said that the current volatility inflow of liquidity in the financial market will soon be heading for correction through interest rate adjustment.
He observed that the demand and supply of liquidity and its consequences on interest rate has been leading the financial market to automatic stabilization for the longer term.
He added that the leakage of liquidity through imports might be slowed down by rising interest rates on financing imports. He said added that NRB will be vigilant on the cost of funds being provided in the productive sector.
Source : TRN,
