145;Hike in cash reserve unlikely to affect interest rates146;

As the RBI has largely maintained its previous stance of tightening the liquidity in the new credit policy...

As the RBI has largely maintained its previous stance of tightening the liquidity in the new credit policy, the industry seems to have taken this decision well. 8220;RBI8217;s mid-term monetary policy is a continuation of its policy announced last time, except that it has realised that there is excess liquidity,8221; the finance minister said.

But why the CRR hike, when, the p-note cap has been brought in by Sebi that will impact liquidity? Agrees, Indranil Sen Gupta, senior director, DSP Merrill Lynch, 8220;we were surprised by the hike, as we expected the RBI to await the liquidity impact of Sebi8217;s p-note cap. If flows dry up, seasonal cash demand will squeeze liquidity in March 2008.8221; However, economic fundamentals remain strong, says Kaushal Sampat, COO, Dun 038; Bradstreet, 8220;strong capital inflows are likely to continue.8221;

The current liquidity situation is likely to continue and the CRR hike may not have significant impact on the retail front. 8220;The hike is unlikely to have any effect on the interest rates. In fact, one can still expect softening of lending rates,8221; said Deepak Parekh, chairman HDFC. As per Venugopal Dhoot, president, Assocham, 8220;the policy statement gives more weightage to inflation.8221;

Will the policy impact the markets in anyway? According to Sandesh Kirkire, chief executive officer, Kotak Mahindra AMC, 8220;the policy measure won8217;t impact the stock markets.8221;

So, how does the market look like for the future? 8220;Markets may still continue to remain euphoric in the near term, on potential rate cuts by fed and excessive risk seeking globally,8221; said Shuchita Mehta, senior economist, Standard Chartered Bank.

RUPEE RISES

MUMBAI: The Indian rupee climbed towards 9-year highs on Tuesday on capital inflows, and traders said central bank intervention stopped the ascent though a gradual appreciation was likely in the near term. The rupee ended at 39.3950/4025 per dollar, up from the previous finish of 39.42/43, but off the intraday high of 39.30.

8220;The central bank will keep coming into the market and buying dollars, there8217;s no particular level as such in their minds, 8221; said a dealer.