RBI's OMO auction sees strong demand, but experts say job still half done

Net liquidity fell into deficit after seven weeks; net liquidity in the banking system was in a deficit of ₹68,586 crore on Wednesday

The Reserve Bank of India (RBI) on Thursday received bids worth ₹1.39 trillion at the open market operations (OMO) purchase auction, against the notified amount of ₹50,000 crore.

 

Market participants said that the cut-off yield was set along the expected lines.

 

The central bank has infused ₹1.45 trillion durable liquidity so far in December through OMO purchases and forex buy-sell swaps.

 

However, experts said that additional OMOs purchases might be needed to support smoother monetary transmission, help correct the excessively steep yield curve, and ease demand-supply pressures in the government bond market.