In order to inject liquidity in the system RBI reduced the CRR by 50 basis points this is one of the rare case were RBI has reduced the CRR over a period of time. This measure was to ease the unprecedented liquidity crunch faced by banks and also to boost capital in flows. It was expected the move will release Rs 20,000 crore into the system, a small relief for banks, who reckon the move could positively impact short-term rates, but not lead to any changes in lending rates.
But today dollar went up to 48.7300, and RBI again had to sell dollars which will lead to liquidity crisis again whatever RBI released through CRR will go back again while selling the dollar in order to control the exchange rates.RBI can do one action at a time weather it can control exchange rates or interest rates which is the main moti
