FCNR flows to complicate liquidity management, lead RBI to deploy more tools: Economists

Higher FCNR(B) inflows are complicating the Reserve Bank's liquidity management. The banking system currently holds excess liquidity at a four-year high. Economists anticipate the RBI will deploy additional tools to absorb surplus funds. These measures may include variable rate reverse repo operations and incremental CRR hikes. Forex reserves have reached a record high of USD 729.3 billion.