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RBI watching liquidity situation

The Reserve Bank Of India is monitoring the money market liquidity closely and is absorbing excess funds through the daily repos, a bank official told Reuters on Friday.

"We are neither comfortable nor uncomfortable with the fall in government bond yields," the source said, when asked whether the central bank was concerned with sliding yields.

Bond yields slumped to life lows on Friday on a combination of factors like easy money, no moves by the central bank to conduct more bond sales, lower-than-expected yields at the auctions held in the past two days and a cut in deposit rates by the State Bank of India.

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