RBI scales up amount of liquidity infusion by Rs 100 bn to Rs 500 bn in Dec

The Reserve Bank said on Tuesday it has decided to scale up the amount of liquidity infusion by Rs 100 billion to Rs 500 billion this month after a review of the evolving liquidity conditions.

The central bank had earlier announced to infuse liquidity amounting to Rs 400 billion through the purchase of government securities under Open Market Operations (OMOs) during December.

The RBI has already injected Rs 200 billion through two OMO purchase auctions.

"On a review of the evolving liquidity conditions, it has been decided to scale up the amounts to be purchased in the remaining two OMO auctions scheduled in December 2018 to Rs 150 billion each. Consequently, the total injection of durable liquidity for the month of December 2018 would amount to Rs 500 billion," it said in a release.

The RBI also announced to conduct the purchase of government securities under OMO for Rs 150 billion on December 20.

The Reserve Bank further said it has decided to inject liquidity under OMOs for Rs 500 billion in January 2019. The operations will be conducted through five auctions of Rs 100 billion each.

"The liquidity conditions will continue to be monitored and depending on the assessment, RBI will consider similar quantum of OMO purchases until the end of March 2019," it added.

It further said the exact calibration of the quantum of OMO would depend on sustained changes in the behaviour of currency in circulation, the magnitude of sterilisation operations for RBI's forex operations and other relevant factors.