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RBI to buy Rs 360 billion worth of bonds in October to ease liquidity

Since mid-September, the RBI has conducted two OMO purchases, infusing Rs 200 billion, to ease liquidity pressure

Anup Roy  |  Mumbai 

RBI

The Reserve Bank of India (RBI) on Monday said it would buy Rs 360 billion worth of bonds from the secondary market in October to meet the durable needs and the seasonal growth in in circulation observed in the build-up to the festive season. The auctions will be conducted during the second, third, and fourth weeks of October.

This advance intimation of (OMO), along with last week’s relaxation of the coverage ratio by 2 percentage points, infused the much-needed support for the The yields on the 10-year bond closed below 8 per cent (at 7.987 per cent) on Monday.

Since mid-September, the has conducted two OMO purchases, infusing Rs 200 billion, to ease pressure due to and goods and services tax-related payments. Since the start of the financial year, five OMOs were done of Rs 100 billion each. The had guided in its post-policy conferences that systemic liquidity would move into deficit in the second half of the fiscal year and that the evolving liquidity conditions would determine its choice of instruments, for both transient and durable liquidity management. It had assured the market on September 27 that it was ready to meet the liquidity requirements of the system.

First Published: Tue, October 02 2018. 02:32 IST
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