The Reserve Bank of India allowed banks to dip further into statutory liquidity reserves to help them meet their liquidity coverage ratio needs, a step that would boost cash available for lending. On Wednesday, the government raised import taxes on $12 billion of goods as it seeks to narrow the current-account deficit from a five-year high.
The coordinated policy moves come as Asia’s third-largest economy faces a barrage of bad news, from elevated oil prices and a tumbling rupee to the debt crisis at a lender and a cash crunch in the banking system. Foreigners have pulled $8.6 billion from local shares and debt this year, adding to the weakness in the currency that’s already Asia’s worst performer. The measures may not go far in lifting the despondency that has settled over the markets.
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