The market is responding to the change in Statutory Reserve Ratio which absorbed Rs18bn from the banking system, the central bank said in its monetary policy statement.
On April 12, 2011 the central bank raised its reserve ratio, the amount of deposits that banks must hold at the monetary bank by 100 basis points to 8.0 percent to draw in excess liquidity and contain inflation.
The full central bank statement follows:
With the continuation of the momentum in the Industry and Services sectors led by trade related activity and tourism, as well as the continuous improvements in productivity, the growth in real GDP during the first quarter of 2011 was largely within targets, although there was a setback in the Agriculture sector.
Domestic supply conditions have recovered from the impact of floods in early 2011, and the current