By appropriately timing the release of liquidity to the financial system to coincide with the auctions of government securities, the Reserve Bank ensured a relatively normal liquidity conditions in the markets and in the process facilitated smooth conduct of the government’s market borrowing programme.
This, in fact, underlines the importance of high level of co-ordination between monetary policy and debt management policy for successful completion of market borrowings during volatile periods. During turbulent times, there remains a strong possibility of agencies pursuing their narrow objectives and in the process undermine coordination.