On Friday, the Reserve Bank of India (RBI) conducted a significant operation by absorbing ₹2 trillion ($24 billion USD) from the banking system through a 7-day variable rate reverse repo (VRRR) auction, marking its first such action since December 2025. This move was aimed at draining excess liquidity, which had reached ₹4.5 trillion on Thursday, and it resulted in an immediate increase in the yield on the benchmark 10-year government bond, which rose by 4 basis points to 7% before stabilizing at 6.91%. Market analysts noted that while the auction surprised some, the market managed to stabilize by the end of the trading session. The weighted average call rate (WACR) was reported at 5.04%, slightly down from 5.08% the previous day. The RBI's actions follow a period of liquidity infusion, during which it injected approximately ₹3.5 trillion into the system since January 2026 to counteract tightness caused by tax outflows and other financial obligations. Analysts suggest that more VRRR operations may be conducted if market rates drop below the Standard Deposit Facility (SDF) rate, which is the interest rate for banks parking surplus funds with the RBI.