 "RBI to buy up to Rs 10,000 cr of bonds")
The Reserve Bank of India (RBI) will be buying up to Rs 10,000 crore of bonds from the secondary market on Wednesday under its open markets operations (OMOs).
OMO is a liquidity management tool of the central bank. The OMO will come before the Friday's auction of Rs 14,000 crore where the central bank would be selling bonds maturing between eight and 40 years, including Rs. 7,000 crore through the newly issued 10-year benchmark.
This is the first OMO in this calendar and only third OMO of this financial year. On 14 July OMO, RBI sold Rs. 8,270 crore of bonds to suck out liquidity from the system and on 7 December's OMO, RBI had purchased Rs. 10,000 crore of bonds to infuse liquidity.
RBI plans to buy bonds maturing between seven to 14 years through the OMO.
The OMO is being done for the most traded bonds in the market. After the OMO, the yields of these bonds are expected to cool off, having risen recently.
The OMO is also coming after the system witnessed liquidity shortage of Rs. 1,43,724 lakh crore as on 15 January, data from RBI showed. The liquidity has tightened following advanced tax outflow by Indian companies.
