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RBI watching money market liquidity

The Reserve Bank of India is closely monitoring the liquidity situation in the money market, a source told Reuters on Wednesday.

But the source declined to say whether the Reserve Bank of India would sell bonds from its portfolio to absorb some of the cash surplus.

"Liquidity is very high, and we are monitoring the market. But we cannot say more than that," said the source, who declined to be identified.

A huge cash pile-up in the money market has pushed bond yields to new lows.

The central bank sold bonds worth Rs 110 billion last week to absorb some of the surplus cash.

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