RBI announces slew of measures to inject liquidity to banking system

The central bank will conduct Open Market Operation purchase auctions of government securities worth Rs 600 bn ($6.96 bn) in three tranches and hold a 56-day variable rate repo auction for Rs 500 bn

India's central bank on Monday announced a host of measures to inject liquidity in the banking system, including bond purchases and dollar/rupee swaps. 

The Reserve Bank of India will buy government bonds worth Rs 60,000 crore ($6.96 billion) in three tranches and conduct a 56-day variable rate repo auction worth Rs 50,000 crore on Feb. 7, it said in a release. 

It will also conduct a USD/INR buy/sell swap auction of $5 billion for a tenor of six months on Jan. 31, the RBI said. 

India's banking system liquidity deficit widened a one-year peak in the previous fortnight. 

The daily average banking system liquidity deficit jumped to Rs 2.39 trillion in the fortnight which ended on Jan. 24, as per latest RBI data. 

The RBI "will continue to monitor evolving liquidity and market conditions and take measures as appropriate to ensure orderly liquidity conditions," it said. 

The announcement is expected to have a "moderating influence" on bond yields, Vivek Kumar, an economist at QuantEco Research said.  (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)