Although Mint Road is not part of the global swap lines facility from the Federal Reserve, the central bank may join the rest of the emerging central banks in a coordinated attempt to avoid a financial markets freeze.

India’s central bank is likely to reduce its benchmark repo rate sooner than previously expected even as it follows up last week’s $2-billion swap auction with more timely and immediate measures to ensure adequate system liquidity through the current crisis.

“There are businesses like tour operators and hotels and restaurant chains which may see dislocation,” said a person familiar with the thinking. “These businesses may find it difficult to meet their payments if people stop turning up.”

Although Mint Road is not part of the global swap lines facility from the Federal Reserve, the central bank may join the rest of the emerging central banks in a coordinated attempt to avoid a financial markets freeze.

“Dollar liquidity is more important now, although the system will require rupee liquidity ahead of the financial year end,” said Kumaresh Ramakrishnan CIO — fixed Income, PGIM India Mutual Fund. “While the central bank could repeat a swap auction, it would keep a close watch on other emerging market central banks for a possible coordinated action.”

Meanwhile, bankers say that the central bank has more time than its peers to assess the impact on growth and may not advance its monetary policy committee (MPC) meeting, scheduled for the first week of April, for a rate decision.

“The consensus had shifted from no cut in April about 15 days ago to a large likely cut. But I think the RBI can afford to wait until the pre-decided date of monetary policy announcement because the impact of the virus in India is still limited,” said Ashish Vaidya, country treasurer at DBS Bank.